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South African consumer price inflation eased further in July, to reach a two-year low, data released by the Statistics South Africa showed on Wednesday.
The consumer price index or CPI rose 6.7% year-on-year in July, slower than the 6.9% increase seen in the previous month. Economists were looking for an increase of 6.6%.
Food and non-alcoholic beverages prices rose 8.3% in July, compared to the 10.2% increase in June, while clothing and footwear prices rose 5.2%. But, transport charges fell 3.4% year-on-year.
On a monthly basis, the CPI increased 1.1% in July, in line with economists' expectations. In June, consumer prices were up 0.4%. Food and non-alcoholic beverages prices decreased 0.4%, while housing and utilities index increased 3.3%, led by a 21.5% monthly increase in electricity and other fuels.
On August 13, the South African central bank had unexpectedly lowered its key interest rate to 7% from 7.5%, saying that the domestic economy is lagging behind international developments.
Central bank Governor Tito Mboweni said there are encouraging signs that the global slowdown may have reached its lower turning point, although the speed and extent of the recovery are still subject to a high degree of uncertainty.
The economy shrank for the third straight quarter in the second quarter, the first such instance since the final three months of 1992. The gross domestic product decreased a seasonally adjusted and annualized 3% in the second quarter, after a 6.4% fall in the previous quarter.
The jobless rate stood at 23.6% in the second quarter, up from 23.5% recorded in the previous quarter.
Policymakers are of the view that the adverse economic conditions appear to tilt the balance of risks to the inflation outlook towards the downside over the medium term notwithstanding upside cost pressures.
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