South Africa CPI Inflation Rate: Data, Forecast & Trends

In April 2025, South Africa's annual consumer price inflation rate edged up slightly to 2.8% year-on-year (YoY), an increase from 2.7% in March 2025. Despite this marginal uptick, it represents the lowest level for headline inflation since June 2020 and marks the second consecutive month that the rate has fallen below the lower bound of the South African Reserve Bank's (SARB) 3% to 6% inflation target range. This prolonged period of low inflation is a significant development, contrasting sharply with the inflationary pressures experienced globally over the past few years.

The current rate reflects the effectiveness of the SARB's tight monetary policy stance and a more benign domestic and global price environment.

A deeper dive into the components of the 2.8% annual inflation rate in April 2025 reveals the key drivers:

• Housing and Utilities were the main positive contributors, with an annual increase of 4.4% and contributing 1.0 percentage point to the overall rate. This category includes electricity, gas, and fuel prices, which saw a notable rise of 11.6% YoY.
• Food and Non-Alcoholic Beverages (NAB) also played a significant role, with inflation accelerating to 4.0% YoY in April, up from 2.7% in March. This marked the highest annual rate for this category since September 2024. This increase was primarily driven by higher meat prices, especially beef products, which increased by 2.3% MoM. Hot beverages, particularly instant coffee, also saw substantial increases, with coffee prices rising by 20.2% YoY. Food and NAB contributed 0.7 percentage points to the headline rate.
• Alcoholic Beverages and Tobacco saw prices rise by 4.7% YoY, contributing 0.2 percentage points, reflecting a higher increase compared to March's 4.1%.
• Restaurants and Accommodation Services recorded an annual increase of 3.0%, contributing 0.2 percentage points.

Conversely, some components exerted downward pressure:

• Transport prices recorded a significant decline of 3.9% YoY, a sharper fall than the 2.4% decrease in March. This was mainly due to a substantial 13.4% decline in fuel costs compared to a year ago, providing a crucial disinflationary impulse.
• The annual inflation rate for goods as a whole eased to 1.7% in April from 2.0% in March, while services inflation edged up to 3.8% from 3.5%.

On a month-over-month (MoM) basis, the Consumer Price Index for South Africa increased by 0.3% in April 2025, a slight moderation from the 0.4% MoM increase recorded in March 2025. This indicates a continued, albeit slower, increase in the cost of living on a monthly basis.

Key drivers for the monthly increase included:

• Food and Non-Alcoholic Beverages: Saw a monthly increase of 1.3%, the largest increase since October 2023. This was largely driven by a 2.3% MoM increase in meat prices (specifically beef products) and a 1.4% MoM increase in oils and fats.
• Alcoholic Beverages and Tobacco: Increased by 1.3% MoM.
• Housing and Utilities: Saw a 0.2% MoM increase.

Conversely, fuel prices continued their monthly easing, declining by 3.2% between March and April, which contributed to the overall moderation of the MoM headline figure.

South Africa's average annual inflation rate for the calendar year 2024 was 4.4%. This represents a notable decrease from the 5.9% recorded in 2023, marking the lowest average inflation in South Africa since 2020. The moderation in inflation throughout 2024 was influenced by various factors, including the easing of global commodity prices and the South African Reserve Bank's continued commitment to its inflation-targeting mandate.

Despite the overall decline, certain categories contributed more significantly to price increases. Housing and utilities, particularly driven by electricity prices, and miscellaneous goods and services were key contributors to the 2024 average. While the annual average shows a positive trend towards disinflation, the South African Reserve Bank maintains a watchful eye on price developments to ensure inflation remains anchored within its target range of 3% to 6%.

South Africa's inflation history over the last three decades has been characterized by periods of volatility, often influenced by global commodity price cycles, exchange rate movements, and domestic economic performance.

In the 1990s, South Africa transitioned from apartheid, with inflation rates typically in the high single digits or low double digits. The late 1990s saw a concerted effort to bring inflation down, with the introduction of an inflation-targeting framework.

The 2000s were marked by the formal adoption of inflation targeting by the South African Reserve Bank (SARB) in 2000, with a target range of 3-6%. Despite this, inflation remained susceptible to external shocks. The global commodity boom in the mid-2000s, coupled with robust domestic demand, pushed inflation higher, with a peak of 11.5% in August 2008 following the global financial crisis. However, the SARB's proactive monetary policy helped bring it back within target relatively quickly.

The 2010s saw inflation largely contained within or close to the 3-6% target band for much of the decade. Exceptions included periods of rand weakness and drought-induced food price spikes. However, economic stagnation and high unemployment also contributed to keeping demand-side pressures somewhat subdued.

The early 2020s presented unprecedented challenges. The COVID-19 pandemic, coupled with the Russia-Ukraine conflict, caused significant supply chain disruptions and a surge in global commodity prices. South Africa's inflation peaked at 7.8% in July 2022, primarily driven by soaring fuel and food prices. The SARB responded with aggressive interest rate hikes, raising the policy rate from 3.5% in late 2021 to 8.25% by May 2023. These actions, alongside a moderation in global commodity prices, have contributed to the recent disinflationary trend.

Headline inflation in South Africa, measured by the CPI, reflects the overall change in the cost of a basket of consumer goods and services. Core inflation, typically excluding volatile items such as food, non-alcoholic beverages, fuel, and energy, provides a clearer signal of underlying, persistent inflationary pressures. The SARB closely monitors both.

In April 2025, while headline inflation was 2.8% YoY, core inflation eased further to 3.0% YoY, down from 3.1% in March 2025. This marks the lowest core inflation reading since July 2021. The fact that core inflation is only slightly above headline inflation, and also at the very bottom end of the SARB's target range, is a significant positive development.

This small difference between headline and core inflation indicates that the disinflationary trend is broad-based, not just a result of fluctuating food and fuel prices. The decline in core inflation suggests that demand-side pressures are subdued and that the SARB's prolonged period of high interest rates has effectively anchored inflation expectations and reduced underlying price momentum across the economy. It suggests that businesses are finding it harder to pass on cost increases, or that demand is insufficient to absorb them.

Despite the recent positive inflation data, several risks continue to cloud South Africa's inflation outlook:

• Exchange Rate Volatility: The South African Rand (ZAR) is highly sensitive to global risk sentiment and domestic political developments. Any significant depreciation of the ZAR, driven by external shocks (e.g., US Federal Reserve policy shifts, global economic slowdown) or internal political instability (especially around the upcoming elections), would immediately push up the cost of imports, fueling imported inflation across various goods.
• Global Commodity Prices: While global fuel prices have seen some easing, a resurgence in international crude oil prices due to geopolitical events (e.g., Middle East tensions, OPEC+ supply decisions) or increased global demand could quickly reverse the current disinflationary trend in transport costs. As a commodity exporter, South Africa benefits from higher prices, but as a net importer of oil, it faces significant inflationary pressures. Similarly, global food commodity prices remain susceptible to supply disruptions from climate change or geopolitical factors, which would transmit into domestic food inflation.
• Administered Prices: Prices set by government or regulated entities, such as electricity tariffs (Eskom), municipal rates, and public transport fares, pose a persistent upside risk. Eskom's ongoing financial challenges and infrastructure needs often lead to significant annual electricity tariff increases, which impact both households and businesses, with cascading effects on overall inflation. For instance, the April 2025 data showed administered prices contributing significantly to housing and utilities inflation.
• Loadshedding and Infrastructure Failures: Persistent and unpredictable electricity load shedding continues to disrupt economic activity, raise production costs for businesses (due to reliance on generators), and hinder investment. This effectively acts as a supply shock, reducing productive capacity and contributing to higher operating costs that are ultimately passed on to consumers. Similar challenges in logistics and port infrastructure can also create supply bottlenecks and inflationary pressures.
• Wage Pressures: While current wage growth is not a primary driver of inflation, a tightening labor market (or strong union wage demands, particularly in the public sector) that outpaces productivity growth could lead to a wage-price spiral.
• Fiscal Sustainability: South Africa's high public debt levels and ongoing fiscal pressures require careful management. Any perception of fiscal slippage or increased borrowing could weaken investor confidence, exert downward pressure on the rand, and indirectly fuel inflation. Government spending, particularly if not directed towards productive investments, can also create demand-side inflationary pressures.
• Inflation Target Debate: The South African Reserve Bank (SARB) has indicated a preference for a lower inflation target. While a lower target can anchor expectations, any sudden shift without a clear path or if not well-communicated, could temporarily disrupt market expectations and lead to uncertainty, impacting pricing behavior.

South Africa Inflation Data