Annual inflation slowed more than expected to 3% year-on-year in February from 3.5% in January, official data showed on Wednesday, helped in part by base effects linked to a delay in the implementation of some new medical aid rates.
The easing in inflation is, however, not likely to sway the South African Reserve Bank (Sarb) towards an interest rate cut next week, given the conflict raging in the Middle East has driven oil prices up sharply, pushing inflation expectations for the year significantly higher.
The main contributors to the 3% annual inflation rate for February were housing and utilities, which came in at 4.8% and contributed 1.1 percentage points to the headline number, Statistics South Africa said.
Inflation for food and non-alcoholic beverages was at 3.7%, while insurance and financial services recorded 4.7%.
The annual inflation rate for goods was 1.9%, down from 2.7% in January, while that for services eased to 3.8% from 4.2% in January.
On a month-on-month basis, the consumer price index increased by 0.4% in February compared with a rise of 0.2% in January.
The annual slowdown for February is best explained by comparing the monthly change of 0.4% in February this year to that of 0.9% a year ago, said Patrick Kelly, chief director for price statistics at Stats SA, citing mainly the postponed implementation of some new medical aid rates.
“Most medical schemes increase prices at the beginning of each year and are surveyed by Stats SA in February. This results in higher than average monthly rates. In February 2026, however, not all medical schemes had adjusted their contributions. This delay resulted in a lower monthly change in the CPI than might otherwise have been the case,” Kelly said.
“Those schemes that did implement an increase contributed to an average rise of 6.4% in the health insurance index, lower than the 10.5% increase recorded in February 2025. Health insurance has a relatively large weight of 6.2% in the inflation basket. The delayed implementation of medical aid increases in February had a notable impact on the headline rate.”
Inflation should, however, starting pushing higher from April as the surge in oil prices filters through to domestic fuel prices, said Tertia Jacobs, Treasury economist and fixed income analyst at Investec.
The government regulates and adjusts fuel prices on a monthly basis, based on whether fuel importers are under-recovering or over-recovering their procurement costs, depending on international prices and the rand exchange rate.
“The average daily under-recovery for petrol is R4.74, that’s substantial, and for diesel it’s R7.72,” Jacobs told Business Day, recalling the government had initially stepped in to cushion consumers from a steep fuel price hike after Russia’s invasion of Ukraine in 2022 sent global oil prices similarly soaring.
“The government sold some of its strategic oil reserves of R4.5bn and cut the fuel levy for two months for April and May (2022). But then it couldn’t continue in June and we saw the hike coming through. The question is, can it do something now? What I understand is we have very limited oil reserves at the moment, so I’m not sure there’s any capacity to sell.”
At its monetary policy committee meeting next week, the Reserve Bank is likely to signal its inflation forecasts have shifted significantly since January, when governor Lesetja Kganyago said the measure had probably peaked at 3.6% in December and would slow down from there.
Inflation expectations for the next 12 months ticked up slightly among households to 5.4% in the first quarter of 2026 from 5.3% in the fourth quarter of 2025, though they remained benign among analysts, business people and trade union officials, according to a Bureau for Economic Research survey published earlier this week.
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