South Africa’s inflation is expected to remain largely unchanged in March in what economists predict will be the calm before the storm, when steep domestic fuel cost hikes in response to higher global oil prices will lead to an acceleration in the April print.
Data from Stats SA last month showed the consumer price index (CPI) rose 3% year on year in February, a slowdown from 3.5% in January. This was, however, not enough to persuade the South African Reserve Bank to cut interest rates.
In fact, the Bank warned of possible hikes later in the year as it anticipated elevated price pressures due to the turmoil in oil markets as war rages in the Middle East.
Fuel has a 4%–5% weighting in the CPI basket, but its impact is often higher because South Africa imports most of its fuel products, making it vulnerable to volatile international prices and fluctuations in the rand exchange rate.
Stats SA’s publication on Wednesday will probably show that consumer inflation slowed to 2.9% year on year in March, Investec economist Lara Hodes predicted.
“The petrol price rose modestly at the beginning of March, which will have added some modest upside inflationary pressure,” she said.
“Fuel prices are calculated on price movements during the previous month, however, and the effect of the surge in oil prices and depreciation of the rand as a result of the war in the Middle East will be felt in April’s CPI number, which is expected to have lifted by 1% month on month and 3.6% year on year.”
Banking groups FNB and Nedbank are expecting consumer inflation to have ticked up slightly to 3.1% in March.
Though crude oil is the underlying input, the more relevant driver for South Africa is the price of refined petroleum products, which has increased more significantly due to constraints in production and logistics, Bureau for Economic Research (BER) economist Tracey-Lee Solomon said.
“Even if crude oil prices ease, refined product prices are unlikely to adjust as quickly. The current environment reflects supply and logistical constraints: damage to refining infrastructure, shipping backlogs and delays, limited storage capacity and curtailed crude production due to bottlenecks,” she said.
“In addition, refineries that rely on imported crude face feedstock constraints until supply chains normalise. This means that the pass-through from lower crude prices to pump prices will be delayed. A near-term return to pre-war fuel price levels this year appears unlikely.”
Just as the effect of the war will not have yet filtered through to the March CPI number, it will also not be reflected in Stats SA’s retail sales number for February, also due out on Wednesday.
“We forecast retail sales growth of about 4.3% year on year in February, a slight increase from 4.2% in January,” economists at Nedbank said. “Household spending at that time would have been supported by the favourable inflation backdrop, easier financial conditions and improving sentiment before the onset of the Iran war.”
On Tuesday, the South African Chamber of Commerce and Industry (Sacci) will release its bimonthly business confidence index for March. The index dipped to 131.4 in January from 133.2 previously.
Last month, Sacci said the war in the Middle East would have negative effects on the business cycle and result in a deterioration in inflation, interest rates, economic growth, exchange rates and commodity prices.
“This does not bode well for any prospect of recovery that we would have anticipated as South Africa,” the business chamber warned.
Also on Tuesday, the Reserve Bank will release the first edition of its 2026 monetary policy review.
Published twice a year, the review analyses domestic and global economic developments affecting interest rate decisions. It explains the stance of the Bank’s monetary policy committee, forecasts inflation and provides forward-looking insights on policy.
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