Inflation surprise for South Africa
Inflation has ticked downwards in South Africa in August, surprising against market and economist expectations of a small lift.
Annual consumer price inflation dropped from 3.5% in July 2025 to 3.3% in August 2025. Softer food and fuel inflation took some heat off the headline rate.
Market analysts and economists anticipated a small hike in inflation for the month, with consensus sitting around 3.6% to 3.7%. A drop in inflation came a surprise.
CPI decreased by 0.1% month-on-month in August 2025, with four of the 13 categories seeing monthly declines.
Annual inflation for food & non-alocholic beverages subsided to 5.2% from 5.7% in July.
Several categories recorded lower rates, including cereal products; fish & other seafood; milk, other dairy products & eggs; fruits & nuts; and vegetables.
Some staples are cheaper than a year ago, including hot cereals (-7.8%) and white rice (-7.2%). Bread and pasta products recorded zero or low price increases.
However, other staple items are becoming far more expensive, including samp (+14.8%) and maize meal (+8.2%).
Beef products continued to register high annual rates, even if the monthly price increase in August was the lowest since April.
Beef mince saw a 12-month change of 27.2% and a monthly rise of 0.2%. Stewing beef grew at an annual rate of 32.3% while its monthly change was 0.6%.
Beef steak prices were 28.6% higher than a year ago, even if they were down by 1.2% between July and August.
The rise in beef prices follows an outbreak of foot and mouth disease at the country’s largest feedlots, which put extreme pressure on supply.
However, the low monthly changes follow factory-gate inflation of -7.8% in July for beef carcasses.
The price index for milk and other daily products and eggs declined by 1.1%, the lowest annual print since March 2011 when the rate was 1.4%.
Prices for fresh full-cream milk decreased by 2.9% between August 2024 and August 2025.
The annual rate for fuel was -5.7%, down from -5.5% recorded in July. Petrol prices decreased 28c per litre, resulting in a 1.3% monthly decline.
That said, diesel prices increased by 2.5% between July and August.
Overall, beetroot prices saw the largest rise, climbing 71.4%, even if they declined between July and August.
Products recorded significant annual price decreases include potatoes, eggs, white rice, hot cereals and corned meat.
Non-food and beverage items that registered sharp annual increases include books (+30.8%), movie tickets (+15.9%) and video games (+14.7%).
Interest rates
The latest inflation is good news for interest rate cuts ahead of tomorrow’s Monetary Policy Committee (MPC) of the South African Reserve Bank (SARB) meeting.
Inflation has remained subdued since October 2024, with the latest figure sitting at the bottom end of the current 3% to 6% target range.
Although the MPC has pushed to lower its target anchor from 4.5%, the midpoint of the current range, to 3%, Finance Minister Enoch Godongwana, who has the power to change the target, has not announced anything.
The MPC doesn’t base its interest rate decisions on past inflation data, but inflation expectations across analysts, business people and trade unions have also dropped.
Economists remain unsure if the six-person MPC will cut interest rates amid its desire to lower inflation to 3%, even if most signs would typically point to a cut.
Loading ...