SA’s annual consumer inflation rose to 3.6% in October, its highest level in more than a year, according to Stats SA’s latest consumer price index (CPI) data.
The figure represents a slight uptick from September, when consumer inflation was recorded at 3.4%, but remains comfortably within the SA Reserve Bank’s new target range.
Moreover, excluding fuel, food and nonalcoholic beverages, core inflation dropped to 3.1% year on year from 3.2% in September, pointing to easing underlying inflationary pressures.
At 3.6%, October’s CPI was the highest recorded by Stats SA since September last year, when the rate was 3.8%.
The reading was largely in line with consensus forecasts, with economists at Nedbank expecting a 3.8% year-on-year rise and Investec predicting 3.5%.
Still, any further upticks could throw a spanner in the works of SA’s largely upbeat inflation outlook, underscored by the Bank’s newly affirmed 3% inflation target, which includes a tolerance band of one percentage point on either side.
The data follows a relatively benign inflation picture in recent months, with markets largely expecting the Bank’s monetary policy committee to announce a 25 basis point (bp) cut on Thursday.
Hopes of a rate cut have been further buoyed by the optimistic outlook outlined in finance minister Enoch Godongwana’s medium-term budget policy statement, when the Treasury announced the long-awaited shift to a 3% target.
The Bank cut the repo rate in January, May and July to 7.50%, 7.25% and 7.00%, respectively.
Investec chief economist Annabel Bishop said: “Consumer price inflation is not expected to rise much further over the remainder of the year, with the impact of moderating CPI inflation in [the second half of 2024] exerting a statistical base effect lift on the year-on-year calculation for CPI inflation in [the second half of 2025], but no undue inflationary pressures in other respects.”
Bishop said the move away from 3% year on year was not expected to be met with higher interest rates, with markets now pricing in an 88% chance of a 25bp cut on Thursday.
“SA remains in a rate-cutting cycle, but not necessarily at every meeting,” she said.
The biggest drivers of October’s inflation uptick were in transport; recreation, sport and culture; and alcoholic beverages and tobacco categories, while inflation slowed for restaurants and accommodation services, and food and non-alcoholic beverages.
Several food and non-alcoholic beverages witnessed a cooldown, including vegetables, fruits and nuts, cold and hot beverages, sugar, confectionary and deserts, and meats.
Meanwhile, transport’s annual inflation rate turned positive after 13 months of deflation, rising from 0.1% in September to 1.5% in October.
Fuel prices increased by 0.1% between September and October, pushing the annual rate for fuel to 3.3% — the first positive reading since August 2024.
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