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South Africa’s inflation rate rose sharply in May, driven largely by higher fuel prices, even as food inflation continued to cool. Statistics South Africa (Stats SA) said consumer inflation increased to 4.5% in May, up from 4.0% in April (The Common Sense had forecast 4.8% and the market 4.7%). This was the highest inflation rate recorded since July 2024, when inflation stood at 4.6%. On a monthly basis, the consumer price index rose by 0.7%.

According to The Common Sense’s inhouse economist Bheki Mahlobo, the main reason for the increase was fuel.

Stats SA said the fuel index recorded another large monthly increase, rising by 14.3% in May. Over the past year, fuel prices were up 28.7%. Petrol prices were 24.8% higher than a year earlier, while diesel prices were 53.8% higher.

Mahlobo said, “The scale of the fuel effect can be seen in the inflation number excluding fuel. Stats SA said consumer inflation excluding fuel (and food prices) was 3.8% in May, unchanged from April. That means much of the jump in the headline number came from fuel rather than a broad price surge across the economy.”

Food and non-alcoholic beverage inflation continued to ease, falling to 1.9% in May from 2.9% in April, and some basic food items are now cheaper than they were a year ago. Cereal products recorded annual deflation of 1.4%. Maize meal was 4.4% cheaper than a year earlier, while brown bread was 0.3% cheaper.

Meat inflation also slowed. It fell to 7.3% in May from 9.4% in April.

There were, however, still pressure points in the food basket.

Milk, dairy, and eggs inflation rose to 0.9% from 0.1% in April. Full-cream long-life milk increased by 1.7% in the month and 2.2% over the year. Low-fat fresh milk rose by 1.5% in the month and 3.5% over the year. Cheddar cheese increased by 1.5% in the month and 6.2% over the year.

Mahlobo said, “Given what is happening around Iran, I am fairly confident in the prediction that global oil prices are headed into the $65 to $73 range that we have been predicting for the end of the year, and that this should see fuel prices falling to levels near where they started the year.”

As a consequence, he says he is confident that inflation will move back within the one percentage point threshold around the South African Reserve Bank’s 3.0% target by the end of the year and that, while the central bank will hike rates once more in July 2026, it will hold rates thereafter through the balance of the year.

Mahlobo said, “This is obviously good news for consumers, but also for the country’s political stability outlook. Rising food and transport costs are primary drivers of social instability and if we are right, and inflation has reached its high-water mark, then some of that pressure will be relieved ahead of the November local government elections.”

The Common Sense has written at length about the relationship between food and transport prices and the risk of a political detonation in South Africa.