Pretoria: The Consumer Price Index (CPI) in July fell to 4.9% from 5.5% in June, lower than was expected.

“The headline CPI (for all urban areas) annual inflation rate in July 2012 was 4.9%. This rate was 0.6 of a percentage point lower than the corresponding annual rate of 5.5% in June 2012,” said Statistics South Africa (Stats SA) on Wednesday.

Stats SA said the contributors to the slowdown were the cost of food and beverages, housing and utilities, and transport, which slowed to 0.8% from 1.1% after petrol prices fell.

Over the month, average consumer prices increased by 0.3%.

“While the unexpectedly low July print is a welcome development, the current pace of disinflation is not likely to be sustained. A 22c/litre increase in petrol prices in August is likely to put upward pressure on the transport category; while based on the current under-recovery rate, a petrol price increase of up to 78c/litre could be on the cards for September,” said Standard Bank in a research note.

Nedbank economists expect inflation to remain around 5% for the remainder of the year.

“We think that the MPC [Monetary Policy Committee] will keep rates unchanged at their meeting in September. The decision to either cut rates or keep them steady will depend on whether the combined global monetary stimulus sparks some recovery later in the year in which case rates are likely to remain stable.

“However, if the global economy slips into recession then further easing can be expected. Our baseline view is that rates will remain stable with some reversal in policy easing possible in late 2013 or even early 2014,” said Nedbank.