Major Economies Analysed Recording Lower Annual Inflation in July, While Almost As Many Saw Price Pressures Accelerate

BusinessDay analysis of data from Trading Economics shows that eight of the 16 economies recorded declines in their headline inflation rates between June and July 2026, while seven reported increases. Inflation was unchanged in Zambia, highlighting a continent where price pressures are increasingly being shaped by country-specific factors rather than moving in the same direction. The divergence was particularly stark between Ethiopia and Zimbabwe.

Ethiopia, Africa's second most populous nation, recorded the largest increase among the economies analysed, with annual inflation jumping 1.4 percentage points to 15.3 percent in July from 13.9 percent in June. Zimbabwe recorded the biggest decline, with inflation falling 1.5 percentage points to 3.2 percent from 4.7 percent. The contrasting movements underscore how food prices, energy costs, exchange-rate movements and geopolitical shocks are producing increasingly different inflation outcomes across Africa.

The eight economies that recorded lower inflation were South Africa, Nigeria, Angola, Zimbabwe, Ghana, Tunisia, Mozambique and Botswana. South Africa's annual inflation rate fell to 4.3 percent in July from 5 percent in June, marking its first slowdown in five months. Softer transportation costs were a major driver, with transport inflation falling to 8.9 percent from 12.7 percent, while fuel inflation slowed to 20.6 percent from 34.3 percent.

Food and non-alcoholic beverage inflation also eased to 0.9 percent from 1.6 percent, helped by lower cereal prices and slower meat-price growth. The experience in Africa's largest economy shows how lower global energy prices can quickly feed into domestic inflation. But the improvement may not be enough to persuade the South African Reserve Bank to loosen policy aggressively.

The bank left its repo rate unchanged at seven percent in July, with policymakers balancing a slightly improved inflation outlook against a fragile economic recovery. Governor Lesetja Kganyago warned that renewed Middle East tensions, particularly higher oil and fertiliser prices, could push inflation higher again if they spill into food and core prices. Nigeria also recorded lower headline inflation, falling to 15.43 percent in July from 15.91 percent in June.

But the latest numbers for Africa's most populous nation expose a major weakness in the headline disinflation story. Food inflation, the largest component of the consumer basket, accelerated for the sixth consecutive month to 20.31 percent from 17.52 percent in June. That left food inflation almost five percentage points above headline inflation, signaling that the improvement in the overall inflation rate is not translating evenly into lower household costs.

The Central Bank of Nigeria kept its benchmark interest rate at 26.5 percent last month, citing persistent inflation risks and uncertainty from renewed conflict in the Middle East. Angola continued to record one of the strongest disinflation trends in the sample. Inflation fell to 9.33 percent in July from 10.11 percent in June, marking the 24th consecutive month of deceleration.

The single-digit inflation recorded in the North African country is the first one in nearly 11 years. The easing was supported by the sustained stability of the kwanza and improvements in the domestic supply of essential goods. Transport inflation fell sharply to 3.65 percent from 15.40 percent, while food inflation also eased to 10.40 percent from 10.73 percent.

Ghana also returned to disinflation, with inflation falling to 4.6 percent from 5.3 percent in June. Food inflation declined to 3.1 percent from 3.9 percent, while non-food inflation eased marginally to 6.1 percent. A more stable exchange rate helped curb imported inflation, with the cost of imported goods rising 2 percent year-on-year in July compared with 2.3 percent in June.

While eight economies recorded lower inflation, seven saw price pressures increase in July. Ethiopia led the increase, followed by Mauritius and Egypt. Ethiopia's inflation accelerated for the fourth consecutive month to 15.3 percent, its highest level since January 2025. Food inflation also rose to 15.7 percent from 15.1 percent in June, with significant increases in sugar, jam, honey and chocolate, meat, and oils and fats.