South Africa: Inflation decelerates to nine-month low in February
Latest reading: Consumer prices increased 3.0% on a year-on-year basis in February, following a 3.5% increase in the previous month. February’s reading was the weakest since May 2025 and marginally undershot market expectations.
Relative to the previous month’s data, there were reduced price pressures for food and non-alcoholic beverages (+3.7% on a year-on-year basis vs +4.4% in January) and transportation (-2.1% vs -0.2% in January). Finally, the variation in housing and utilities prices was the same as in the prior month (+4.8% in February and January).
Meanwhile, core consumer prices increased 3.0% in annual terms in February, following a 3.4% rise in the prior month.
Finally, consumer prices were up 0.39% in February on a month-on-month basis, following a 0.19% rise in the previous month.
Outlook: Our Consensus is for inflation to pick up from current levels in Q2 2026, before broadly stabilizing through Q1 2027, nudging the upper bound of the South African Reserve Bank’s 2.0–4.0% target band.
Overall in 2026, inflation will top 2025’s 21-year low, but will remain within the target band. Lower interest rates and faster wage growth will exert upside price pressures.
Key risks to the inflation outlook include extreme weather events, power cuts and commodity price spikes; in particular, a prolonged war in the Middle East leading to higher-for-longer oil prices is a key upside risk—South Africa is a net oil importer.