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Consumer inflation data from Stats SA due on Wednesday will headline an otherwise data-sparse week, with economists expecting a temporary slowdown in July because of lower fuel prices, driven by hopes at the time of a resolution to the US-Iran war that have since been dented.

A year-on-year retreat in the consumer price index in July would snap a four-month upward trend that began in March, when inflation ticked up to 3.1% and climbed to 5% by June, propelled mainly by transport costs as global oil supply constraints linked to the war drove prices higher.

Inflation now sits well above the South African Reserve Bank’s (Sarb) 3% target, with a one-percentage-point tolerance in either direction.

South Africa is a net oil and petroleum products importer, and monthly domestic fuel price adjustments are therefore guided by international trends as well as the rand exchange rate.

In July, the prices of petrol and diesel dropped significantly, helped by a stronger rand and the reopening of the Strait of Hormuz — through which about one-fifth of global petroleum liquids consumption passes daily — which reduced fears of a prolonged disruption to global oil supplies and brought international oil prices down.

“We expect headline inflation to slow quite sharply, from 5% year on year in June to around 4.4%, largely reflecting a monthly decline in fuel prices,” Bureau for Economic Research analyst Tracey-Lee Solomon said.

“The improvement in the headline rate should therefore not be read as an equally broad-based easing in price pressures: core inflation is expected to remain sticky at just above 4%.”

Notably, crude oil futures climbed more than $1 a ​barrel on Friday, pushed up by lack of progress on a peace agreement between the US government and Iran’s leadership, Reuters reported.

The Sarb, which hiked interest rates in May before keeping them on hold in July, still sees upside risks to inflation linked to the conflict, expecting the headline number to persist above 4% until early next year.

Ahead of the inflation data, the department of small business development will kick off the economic week on Monday with an update from minister Stella Ndabeni on the implementation of the country’s Spaza Shop Support Fund.

President Cyril Ramaphosa announced the R500m facility in late 2024 in response to a wave of foodborne illness incidents, including the deaths of several children linked to unsafe food products sold through informal retail channels, including spaza shops. It is intended to help these shops upgrade facilities, buy bulk stock and meet regulatory compliance standards.

Ndabeni and her trade, industry & competition counterpart, Parks Tau, formally launched it in April 2025, but it has been dogged by criticism over slow disbursement and bureaucracy, among other complaints.

On Tuesday, the National Treasury, the Financial Sector Conduct Authority and the National Consumer Financial Education Committee will launch Money Smart Week.

Since its inception in 2018, the financial literacy awareness campaign has provided South Africans with access to free, unbiased and noncommercial financial education initiatives aimed at empowering consumers to make informed financial decisions.

On Wednesday, Stats SA will release its June retail trade sales report after the May print pointed to resilience in the sector despite the pressure consumers are under, with year-on-year growth of 2.3%.

Investec economist Lara Hodes predicted a slight uptick to 2.6% year on year in June, but cautioned: “Consumers are increasingly feeling the effects of elevated inflationary pressures stemming from the oil price shock triggered by the conflict in the Middle East.

“The 25-basis point increase in the [Sarb policy rate] in May has added to borrowing costs, while the sharp deterioration in consumer confidence in the second quarter of 2026 is likely to constrain household spending and dampen the willingness of consumers to make discretionary purchases,” Hodes said.

Business Day