South Africa's inflation rate slowed for the first time in five months in July, partly due to a steep drop in fuel costs, but analysts said it could soon climb again as renewed US-Iran hostilities had since driven global oil prices higher.

Headline inflation in Africa's largest economy eased to 4.3% year-on-year, lower than the 4.5% predicted by economists polled by Reuters and June's 5.0% reading, Statistics South Africa data showed on Wednesday.

The agency attributed the slowdown to three main factors: softer food inflation, lower municipal tariff increases and a decline in fuel prices.

Food and non-alcoholic beverage inflation fell to its lowest level in more than 16 years, reaching 0.9% in annual terms, largely due to cereals and meat.

Municipalities implement tariff increases in July each year, and most categories saw smaller increases than in 2025.

Petrol prices decreased by 7.1% and diesel by 11.7% between June and July, pulling the annual rate for fuel down to 20.6% from 34.3% in June.

Inflation remains above the central bank's 3% target.

August's inflation reading comes out on the same day as the bank's next monetary policy announcement on September 23.

The central bank surprised investors and economists by keeping rates unchanged in July, saying its policy was restrictive enough to return inflation to its target within two years.