Inflation Stays Moderate but Risks Remain

South Africa’s consumer inflation eased to 3.5% in January from 3.6% in December, reinforcing the view of the South African Reserve Bank (SARB) that price pressures likely peaked at the end of 2025.

On a month on month basis, prices rose at the same pace as in December, at 0.2% in January, suggesting that underlying inflationary pressures remain contained. The moderation points to easing consumer inflation at the start of the year, with fewer broad-based increases across key consumption categories.

Looking ahead, inflation may continue to ease on the back of a firmer rand and lower global fuel prices, both of which reduce imported cost pressures. A stronger currency lowers the rand cost of imported goods and fuel, while softer international oil prices feed directly into transport and production costs. Together, these factors suggest that headline inflation could gradually move closer to the SARB’s 3% target over the coming months.

Bheki Mahlobo, economics and policy editor at The Common Sense, said lower inflation creates space for additional rate cuts. “There is now room for the SARB to ease further. However, it is unlikely to move decisively before the United States Federal Reserve meets on 18 March. The Fed’s decision will set the tone for global markets, and the SARB will take that into account before adjusting rates.”