CPI lowest since January
Headline consumer inflation dropped significantly from 4.5% in June to 4.0% in July.
A fall in fuel prices and a rise in municipal tariffs were the key price movers during the month.
Chief economist at Econometrix Francois Stofberg says this is good news for consumers – since the lower inflation will give them more buying power.
"It means that it puts more rands back in your pocket compared to higher levels. In the long term it can help to reduce long-term debt levels by reducing debt levels, which is what we're expecting."
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Stoffberg warns that it is not all good news, as the downward trend also means there is a lack of demand from consumers.
"We see the economy really dragging its feet, struggling to grow. It is exacerbated by lower consumer demand, government demand, export demand, investor demand and as demand continues to falter not only does it hinder the economic growth but it also places a downward pressure on prices.
"Luckily for us, we haven't seen any shop keep prices high like we saw during the drought so, for now, lower prices is definitely good news."
Stofberg says the downward trend is expected to last for the rest of the year.
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