SA’s annual consumer inflation rate rose modestly to 3% in June, up from 2.8% in May, ahead of the Reserve Bank’s monetary policy committee (MPC) meeting next week.
Stats SA reported on Wednesday that the consumer price index (CPI) increased by 0.3% month on month, maintaining a subdued pace of price growth within the Bank’s 3% — 6% target band.
Commenting on the data, Standard Bank group head of SA macroeconomic research Elna Moolman, said: “Such low inflation provides considerable support for consumers, given that most wage increases are higher than this low prevailing rate of inflation. It also arguably supports the case for the Reserve Bank to cut interest rates further at the upcoming MPC meeting next week.”
Investec chief economist Annabel Bishop concurred: “We expect at least one further 25bp [basis point] cut in the repo rate this year, either at the July MPC meeting, or later in the year and a further 25bp cut next year, as the Reserve Bank remains hawkish.”
Bishop added: “However, additional cuts in the repo rate are warranted of at least 1.0%, given the neutral interest rate is about 2.0% above inflation, and demand weak. The [Bank] has room to cut at each remaining meeting this year and should do so.”
Though the 3.0% reading is the highest in four months, it was broadly in line with expectations. Both the Bureau for Economic Research (BER) and independent economist Elize Kruger had forecast a 3.0% annual increase.
Kruger flagged June as a key survey month with new data for rentals, transport services and insurance feeding into the index.
Food and nonalcoholic beverages inflation ticked up to 5.1%, contributing 0.9 percentage points to the annual figure, with meat prices jumping 6.6% due to supply disruptions from foot-and-mouth disease outbreaks. Housing and utilities, which include rentals and electricity, added one percentage point, while alcohol and tobacco contributed 0.2 points.
Offsetting some of these pressures was the continued drag from transport, where fuel prices fell 11.2% year on year and 0.4% month on month. This marks the final month of noticeable fuel deflation before July’s petrol price increase is likely to exert upward pressure again.
Core inflation — which strips out food, nonalcoholic beverages, fuel and energy — fell to 2.9%.
SA economist at Citibank, Gina Schoeman, said their CPI surprise index showed “downside surprises have been far more prevalent as of late, with core inflation recording its fifth consecutive downside surprise, and CPI recording another downside surprise following a pause for the last two months”.
“In our view, an ongoing pattern of downside surprises has been critical in informing [the Reserve Bank] and market views that inflation pass-through and underlying inflation pressures are very muted.”
Rental inflation increased by 1.0% month on month, which added 0.1 percentage points to the monthly increase in CPI.
“Rental inflation has a large weight within the CPI basket at 15.53%, which means that as long as rental inflation remains subdued at about 3% then core inflation is likely to remain contained,” Stanlib chief economist Kevin Lings said.
“However, because the cost of building a new house far exceeds the cost of buying a house, a sustained uplift in SA economic growth that was accompanied by an increase in formal sector employment would push rental inflation meaningfully higher, adding significant upside risk to SA core inflation.”
Despite the slight rise in headline CPI, inflation remains low by historical standards.
Updated: July 23 2025
This story has been updated with comments from economists.
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