South Africa’s consumer inflation has reached its lowest level in over three years, with October’s consumer price index (CPI) falling to 2.8%, down from 3.8% in September, according to data from Statistics South Africa (Stats SA). The sustained decline, now in its fifth consecutive month, marks the country’s lowest inflation rate since June 2020.

Patrick Kelly, Chief Director for Price Statistics at Stats SA, attributed the reduction to significant drops in fuel prices. “Petrol and diesel prices declined by 5.3% between September and October, taking the annual rate for fuel to minus 19.1%. The inland price for 95-octane petrol in October was 21.05 rand per litre, the lowest since February 2022,” Kelly stated.

This trend also drove a 5.3% year-on-year decline in the overall transport index, which encompasses road, rail, air, and sea transport. The resulting decrease reduced the overall inflation rate by 0.8 percentage points.

Food inflation, a major contributor to household expenditure, also moderated. Annual inflation for food and non-alcoholic beverages fell to 3.6%, the lowest level since November 2019. Within this category, the bread and cereal index decreased by 0.5% between September and October, with the annual inflation rate for these staples easing to 4.6%.

Economist Jannie Rossouw of Wits University noted that these figures reflect the efficacy of the South African Reserve Bank’s (SARB) monetary policy. “The consistent decline in inflation underscores the effectiveness of the Reserve Bank’s strategies. The recent drop in fuel prices, influenced by fluctuations in the rand-dollar exchange rate and Brent crude oil prices, has been particularly impactful,” Rossouw said.

The SARB’s decision in September to lower the repurchase rate by 25 basis points—the first reduction following nine consecutive hikes—was a response to these inflationary trends. The central bank is expected to consider further rate adjustments when it convenes on Thursday, though any action will also take into account inflationary expectations and other macroeconomic variables.

Despite the recent reprieve, South African households have endured significant financial strain over the past three years. A report from the Reserve Bank highlighted that South Africa’s inflation rate was the fourth highest among G20 nations in 2023, underscoring the challenges faced by consumers amid global economic uncertainty.