A rare combination is playing out across the global economy, as both oil prices and the United States (US) dollar drop in tandem, offering a double disinflationary dividend for most countries.

Over the past year, oil has become significantly cheaper, with crude down 25.3%, Brent falling 22.1%, and natural gas declining by 17.3%. This pullback feeds through every link in the supply chain, lowering costs for transport, manufacturing, and ultimately, consumers. The result is easing pressures on global inflation, as cheaper energy reduces cost-push pressures that normally erode household purchasing power.

The dollar’s 10% slide over the same period compounds this relief. Because oil and other major commodities are priced in dollars, a weaker greenback means these critical imports now cost less for countries trading in other currencies.

For emerging markets such as South Africa, this development sharply reduces imported inflation — the scenario where local currencies must stretch further to buy energy in dollars. Instead, with the rand and others gaining ground, domestic price growth for fuel and related goods is kept in check.

For global central banks, falling cost pressures allow them to continue their respective interest rate cuts, boosting consumption expenditure and supporting global GDP.