The current El Niño is expected to run from August into February or March next year.
South Africa's inflation rate may have reached its peak for the current cycle, with favourable food prices helping offset renewed pressure from higher oil prices.
Headline CPI inflation slowed to 4.3% in July from 5% in June – the first slowdown in five months, helped by softer fuel price growth and lower domestic food inflation. Annabel Bishop, Investec chief economist, said inflation had "likely peaked," with agriculture and food prices providing an important buffer.
Agricultural producer price inflation was down 10.3% year-on-year in June, while prices for grains and other crops were down 20.3%, Statistics South Africa data showed. Bishop attributed the declines to good weather conditions and bumper harvests, which have also kept animal and animal-product prices relatively moderate.
This has so far limited the extent to which higher oil prices have fed through into food prices. Bishop noted that Brent crude had risen back towards $90 a barrel as the Middle East conflict intensified but said higher oil prices had not yet lifted South Africa's food inflation. Without the slowdown in food price increases, CPI inflation would have been 5%, she said.
