South Africa's annual inflation rate dropped to 4.6% in July 2024, down from 5.1% the previous month, marking its lowest point since July 2021. These figures from the national statistics agency (Stats SA) bring inflation close to the midpoint of the central bank’s target range.

The decline in overall inflation was driven by lower prices in several key areas, including food and non-alcoholic beverages, transportation, housing, and utilities. The situation could prompt the South African Reserve Bank (SARB) to consider lowering its benchmark interest rate, which currently stands at 8.25%, during its next monetary policy committee meeting scheduled for September 19. Earlier in January, SARB Governor Lesetja Kganyago stated that the bank would adjust its monetary policy once inflation reached the midpoint of its target range, specifically 4.5%.

At its most recent meeting on July 18, the monetary policy committee decided to keep the interest rate at 8.25%. However, the decision was not unanimous, with four members voting to maintain the rate while two favored a 25-basis-point cut.