By Paul Makube, Senior Agricultural Economist, FNB Commercial
South Africa’s headline inflation slowed to 4.3% year-on-year (y/y) in July 2026 from 5.0% y/y in June, according to Statistics South Africa. Monthly, the consumer price index increased by only 0.2% month-on-month (m/m), down from 0.7% m/m in June. The moderation reflected softer food and non-alcoholic beverages inflation, lower municipal tariff increases relative to last year, and a decline in fuel prices.
Food inflation eased further to 0.6% y/y in July 2026, the lowest reading in more than 16 years and down from 1.4% y/y in June. The continued deflation in cereal products and a sharp deceleration in meat inflation, while several other food categories recorded mild upward pressure underpinned the latest decline in food inflation. This confirms that the bumper summer crop, improved meat supplies, and favourable fresh-produce availability continue to suppress consumer food prices despite elevated logistics and utility costs.
Cereal products remained firmly in deflation, falling by 2.0% y/y in July from -1.5% y/y in June. Monthly, the category also softened as key staples declined, notably maize meal (-3.1% m/m), macaroni (-0.7% m/m), and white bread (-0.6% m/m). This reflects the pass-through from ample domestic grain supplies following the record summer crop, softer global grain prices, and a relatively supportive rand exchange rate.
In contrast, the global Cereal Price Index as measured by the United Nations’ Food and Agriculture Organization (FAO) rose by 3.4% m/m and 6.9% y/y in July 2026 supported by monthly gains in wheat and maize prices by 5.8% and 3.6% respectively on the back of supply concerns due to the renewed disruptions in the Black Sea region as well as dryness in the US maize belt. The impact on the domestic grain market remains muted due to the combination of a stronger rand exchange rate and the bumper harvest.
Fresh-produce inflation remained mixed. Fruits and nuts, vegetables, oils and fats, fish and other seafood, cold beverages, and milk, other dairy products and eggs recorded higher annual rates in July, but several individual products remained in deep deflation. In the broader food basket, apples (-8.7% y/y), bananas (-5.3% y/y), and oranges (-1.8% y/y) stood out among fruits, while potatoes (-15.7% y/y) and cabbage (-4.8% y/y) were the main vegetable items showing price declines. By contrast, tomatoes increased by 13.8% y/y and onions by 3.3% y/y, highlighting uneven supply dynamics across vegetables.
Meat inflation decelerated sharply to 1.5% y/y in July from 5.1% y/y in June, making it one of the key drivers of the softer food print. The standout declines were concentrated in unprocessed beef, with stewing beef down 7.9% y/y, beef steak down 6.1% y/y, and beef mince down 5.8% y/y. However, processed meat products continued to rise, pointing to divergent price behaviour between fresh and processed meat lines.
Monthly food-price signals were broadly benign but uneven. Cereal products carried the strongest disinflationary impulse through maize meal, macaroni, and white bread, while fish products recorded notable monthly increases. The overall food trend therefore remains favourable for consumers.
The near-term food outlook remains subdued, supported by strong grain supplies and softer fresh-produce prices in several categories. However, risks are tilted to the upside from administered-price increases, electricity and water tariffs, logistics costs, animal-disease disruptions, and potential El Niño-related weather risks for the 2026/27 production season. For now, the July CPI print suggests that food inflation is still providing meaningful relief to consumers and helping offset pressure from housing, transport, and services inflation.
