South Africa: Inflation accelerates to over one-year high in October
Latest reading: Consumer prices were up 3.6% on a year-on-year basis in October, following a 3.4% rise in the previous month. October’s reading was the strongest since September 2024, despite undershooting market expectations.
As a result, headline inflation nudged the upper bound of the new 3.0% inflation target with a 1.0 percentage point tolerance band, which officially replaced the prior 3.0–6.0% target—in place for 25 years—on 12 November.
Relative to the previous month’s data, price pressures were higher for transportation (+1.5% in annual terms vs -0.1% in September). In contrast, price pressures reduced for food and non-alcoholic beverages (+3.9% vs +4.5% in September). Finally, the change in housing and utilities prices was the same as in the prior month (+4.5% in October and September).
Meanwhile, core inflation slowed unexpectedly, easing to 3.1% in October (September: 3.2%).
Lastly, consumer prices rose 0.10% in October in month-on-month terms, following a 0.19% increase in the previous month.
Outlook: Our Consensus is for inflation to accelerate a bit further in November–December, averaging over Q4 as a whole at the highest rate since Q3 2024.
In Q1–Q4 2026, inflation should then stabilize. Still, overall in 2026, inflation will increase from 2025, driven by a continued recovery in purchasing power, lower interest rates and a weaker rand. Upside risks stem from extreme weather, power cuts and commodity price spikes.
Looking further ahead, our panelists see average inflation overshooting the Central Bank’s new 3.0% target through to the end of our forecast horizon in 2030.