July inflation 4.6 yy versus 5.1 in June
Central bank39;s next rate announcement on Sept. 19
Some analysts see inflation falling below 4 by yearend

JOHANNESBURG, Aug 21 Reuters South Africa39;s inflation dropped more than forecast to a threeyear low in July, nearing the level the central bank aims for and cementing analysts39; expectations for an interest rate cut next month.

Consumer inflation fell to 4.6 year on year in July from 5.1 in June, statistics agency data showed on Wednesday, whereas analysts polled by Reuters had forecast annual inflation of 4.9 last month.

The South African Reserve Bank likes to see inflation around 4.5, the midpoint of its 3 to 6 target range, but it has been above that level since mid2021.

Before the latest inflation print, most economists in a Reuters poll had predicted the SARB would reduce its main interest rate by 25 basis points at its next policy announcement on Sept. 19, and a cut now looks more likely.

The SARB has definitely run out of excuses to not cut interest rates… and might have to consider a bigger cut, independent economist Elize Kruger said.

July39;s data seals the deal on a September rate cut, said David Omojomolo, Africa economist at Capital Economics, adding he thought inflation could fall below 4 by the end of the year.

The central bank had said at its July meeting that it expected inflation to dip below 4.5 over the next few quarters, mainly due to falling food and fuel costs.

July39;s data showed…