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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
August 27, 2026

Producer Price Inflation – July 2026

South Africa’s producer price inflation eased from 7.5% to 5.7% year-on-year in July 2026, but the slowdown offers little comfort as rising fuel, energy and intermediate-goods costs continue to reverberate through the economy. With petroleum-related products driving much of the increase, mining costs still elevated, and consumer inflation already above the South African Reserve Bank’s new target range, inflationary pressures remain firmly entrenched, even as monthly producer prices declined. This report examines the sectors driving the latest figures, the implications of ongoing Middle East-related energy shocks, and what the data could mean for consumer prices, inflation expectations, and the Reserve Bank’s upcoming interest-rate decision in September.

In July 2026, producer price inflation increased by 5.7% year-on-year, down from 7.5% in June, as fuel price shocks trickled through the economy into the prices of goods leaving the factory gate. However, producer inflation decreased by 1.0% monthly during July, while the annual increase was mostly due to  cost increases in the following categories:

  • Coke, petroleum, chemical, rubber and plastic products: Increased by 15.7% and contributed 3.4 percentage points,
  • Food and Beverage Production: Increased by 1.9% and contributed 0.6 percentage points,
  • Metals, machinery, equipment and computing equipment: Rose by 3.8% year-on-year while contributing 0.6 of a percentage point.

Production costs for intermediate goods rose by another 9.8% following the 12.4% in June 2026. This indicates that a clear inflationary trend is still ongoing, even though the pace of escalation is slowing a bit. These increases still greatly exceed the South African Reserve Bank’s (SARB) new inflation target range of 2% to 4%. Annual growth is still significantly influenced by increases in fuel and energy prices resulting from the conflict in the Middle East and the subsequent closure of the Strait of Hormuz.

In the primary sector, mining costs climbed by 9.6% in July, following a 18.4% rise in June. In contrast, the agriculture sector experienced a further 4.5% decline, following a 7.9% decrease the previous month.

Overall, the trend in producer price inflation remains above the SARB’s upper target, albeit at a slower rate of escalation in producer prices for final manufactured goods, and this does not bode well for general consumer inflation and inflation expectations in South Africa in the short to medium term. Consumer inflation still exceeds the upper band of the new target range, at 4.3% in July. While prices for certain intermediate goods—particularly water and electricity—continue to exceed the target range, current figures suggest consumer inflation will likely remain elevated in the short- to medium-term, as energy price shocks continue to reverberate throughout the economy.

The Reserve Bank’s upcoming interest rate decision will consider both the Consumer Price Index (CPI) and the Producer Price Index (PPI) when analysing inflation expectations, as price stability remains the key concern for the Bank in making interest rate decisions for South Africa.

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MACROECONOMIC & INVESTMENT INSIGHTS | OCTOBER 2026

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International Trade and Trade Balance – August 2026

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Private Sector Credit Extension (PSCE): August 2026

South Africa’s credit market is showing surprising resilience, with credit demand rising by 7.5% in August 2026 despite renewed interest-rate pressure, elevated inflation and mounting household costs. While mortgage advances continued to grow, the fragile recovery in the property market highlights the strain caused by subdued investment, high debt levels and rising municipal and energy expenses. At the same time, sluggish instalment credit growth and continued reliance on short-term borrowing reveal how consumers are navigating increasingly difficult financial conditions. With higher oil prices, geopolitical risks and further SARB tightening adding to the pressure, this report examines what the latest credit trends reveal about household finances, business confidence and the broader South African economy.