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The slowdown in inflation should provide the Reserve Bank with sufficient evidence of improvement in the inflation outlook to leave interest rates unchanged once more.
That is according to Professor Raymond Parsons, of North West University's Business School.
On Wednesday, Statistics South Africa reported that headline inflation declined from 5.4% in June to 4.7% in July, a two-year low.
Stats SA said the transport sector, previously a major driver of inflation, helped to pull overall inflation down.
Parson said in his reaction that CPI was not only at a two-year low, but the outcome was also much better than "market expectations."
Also Read: Consumer inflation lowest in two years, StatsSA
"It is likely that the declining trend in the rate of inflation will continue for the rest of the year, with inflation remaining well within the South African Reserve Bank's 3-6% inflation target range," he said.
Parson said while the falling rate of inflation is positive upside risks to the inflation outlook still exist, including the vulnerable rand and administered prices such as Eskom tariffs.
He said the better news on the inflation front was encouraging for consumer and business confidence.
"There is a sufficiently persistent trend of improvement in the inflation outlook to justify the Monetary Policy Committee again leaving interest rates unchanged at its meeting next month," Parsons noted.
