South Africa: Inflation picks up in March
Latest reading: Consumer prices rose 3.1% on a year-on-year basis in March, following a 3.0% rise in the prior month. March’s result was in line with market expectations and hovered around the midpoint of the 2.0–4.0% target range of the South African Reserve Bank (SARB).
Relative to the previous month’s figures, there were higher price pressures for housing and utilities (+5.1% in annual terms vs +4.8% in February) and transportation (-1.6% vs -2.1% in February). In contrast, price pressures eased for food and non-alcoholic beverages in March (+3.6% vs +3.7% in February).
Meanwhile, core consumer prices rose 3.2% in annual terms in March, following a 3.0% increase in the prior month.
Finally, consumer prices rose 0.58% in March in month-on-month terms, following a 0.39% increase in the previous month.
Outlook: Our Consensus is for inflation to accelerate from current levels to the upper bound of the SARB’s target range in Q2, where it should stabilize until Q1 2027, before easing back toward its 3.0% target. Stronger wage growth, lower interest rates and spillovers from the war in Iran will exert upside pressures.
Our panelists have hiked their inflation forecasts for 2026 as a whole since the outbreak of the Iran war in late February. Despite these hikes, 2026 inflation is still seen at the lowest level since 2020—bar 2025’s 21-year low—and within the SARB’s target band. Upside risks to the inflation outlook mainly stem from a prolonged conflict in the Middle East, which would likely push up fertilizer, food and oil prices further—South Africa is a net crude importer; as such, our panelists may continue to hike their forecasts ahead. Additional upside risks include extreme weather events and power cuts.