South Africa: Inflation inches up in December
Latest reading: Consumer prices were up 3.6% in annual terms in December, following a 3.5% rise in the previous month. Inflation for 2025 as a whole came in at 3.2% (2024: 4.4%), the lowest rate in 21 years and just below the South African Reserve Bank (SARB)’s 3.3% projection.
Relative to the previous month’s data, there were higher price pressures for housing and utilities (+4.9% on a year-on-year basis vs +4.5% in November) and transportation (+1.0% vs +0.7% in November). Finally, the variation in food and non-alcoholic beverages prices was the same as in the prior month (+4.4% in December and November).
Meanwhile, core consumer prices rose 3.3% in annual terms in December, following a 3.2% increase in the previous month.
Finally, consumer prices were up 0.19% in December in month-on-month terms, following a 0.10% decline in the previous month.
Outlook: Our Consensus is for inflation to largely hover close to current levels through Q4 2027, topping the SARB’s 3.0% target but remaining within its 2.0–4.0% range.
Overall in 2026, inflation will overshoot 2025’s 21-year low but remain contained by historical standards: A strong rand, lower oil prices and record-low inflation expectations will largely offset upside pressures from stronger wage growth and lower interest rates. Extreme weather, power cuts and commodity price spikes pose upside risks to prices.