South Africa's annual consumer inflation eased to 6.7 percent in July, compared to 6.9 percent in June, raising hopes for a further interest rate cut, official data showed Wednesday.

Statistics South Africa said the decline was due to a slight 0.4-percent reduction in food and non-alcoholic beverage prices between June 2009 and July 2009, with lower prices for vegetables, meat, oils and bread.

Trade union Solidarity said the reduced inflation gives room for an interest rate cut when the central bank's monetary policy committee meets next month.

"The drop in inflation still has to be better reflected in interest rate adjustments," it said.

"The Reserve Bank will definitely have to let the positive inflation progress filter through by means of an interest rate," the union said in a statement.

Earlier this month the bank dropped the benchmark repo rate by 50 points to seven percent, the sixth cut since December, as the recession-hit economy continues to lag.