South Africa’s headline inflation rate edged up to 3.4% in September, matching economists’ expectations and reflecting a slight increase from 3.3% in August. The rise came despite easing food prices, which have been a key driver of inflation in recent months.
Food Prices Show Signs of Relief
Food inflation slowed to around 4.8% from 5.2% the previous month, with lower meat and grain prices helping to contain overall price growth. Analysts noted that the slowdown aligned with global trends in agricultural commodities and a 1.5% appreciation of the rand.
Within the food basket, meat prices increased modestly due to the ongoing impact of foot-and-mouth disease, while cereal products remained stable at 1.6% year-on-year. Agbiz projects that South Africa’s 2024–25 summer grain and oilseed harvest will be more than 25% higher than last year’s, supported by favourable rainfall and strong planting activity.
Core Inflation and Key Drivers
According to Investec economist Lara Hodes, the Consumer Price Index (CPI) rose by 0.2% month-on-month in September, with housing, utilities, and hospitality costs contributing most to the increase. Fuel prices had minimal influence, recording only a slight decrease of four cents per litre during the month.
Core inflation, which excludes food, fuel, and energy costs, rose to 3.2% from 3.1% in August. Standard Bank’s head of macroeconomic research, Dr Elna Moolman, noted that the higher reading was largely due to an uptick in rental inflation, although it remains relatively contained.
Policy Outlook and Future Expectations
While inflation remains above the Reserve Bank’s 3% target trend, it continues to trail overall income growth, providing some relief for consumers as real wages improve. Economists believe the marginal uptick in inflation will likely keep interest rates unchanged until 2027, as the Reserve Bank seeks to stabilise inflation within the 3% to 6% range.
The National Treasury is expected to announce an official 3% inflation target during the upcoming Medium-Term Budget Policy Statement in November.
FNB senior economist Koketso Mano forecasts that headline inflation could rise slightly to 3.8% in October, driven by higher fuel costs and seasonal food price pressures. However, she added that inflation should remain below 4% over the next year, barring any major economic shocks.
Stability Ahead
For now, South Africans are benefiting from lower food prices and stable borrowing costs. Yet, economists caution that rising housing and service costs could add subtle pressure to inflation in the months ahead, underscoring the need for continued vigilance.
