Inflation heats up as South Africa braces for next interest rate decision
Annual consumer inflation edged higher to 3.6% in October, up from 3.4% in September, in line with market expectations.
This is the highest inflation print since September 2024, when the rate was 3.8%. The consumer price index (CPI) increased by 0.1% month-on-month in October 2025.
This puts some pressure on the South African Reserve Bank’s Monetary Policy Committee (MPC) this week, as the country awaits the final interest rate decision for the year.
Economists and analysts anticipate the MPC to cut interest rates by 25 basis points on Thursday (20 November), but have flagged rising inflation as a possible barrier that could convince a hawkish panel to hold.
This position could be exacerbated by the recent formal adoption of a 3% inflation target by the National Treasury.
However, according to Investec, consumer price inflation is not expected to rise much further over the remainder of the year, and the new inflation target carries a flexible range of 1 percentage point.
Given this, the move away from 3.0% y/y in H2.25 is not expected to be met with higher interest rates.
Instead, South Africa remains in a rate-cutting cycle, “but not necessarily at every meeting”, the bank said. Markets see an 88% chance of a 25bp cut this week.
Looking at inflation drivers, the transport, recreation, sport and culture, and alcoholic beverages and tobacco categories recorded hotter annual rates.
Inflation cooled for several categories, most notably restaurants and accommodation services and food and non-alcoholic beverages (NAB).
Annual inflation for food and NAB weakened to 3.9% from 4.5% in September.
Several food and NAB categories witnessed a slowdown, including vegetables; fruits and nuts; cold and hot beverages; sugar, confectionery and desserts; and meat.
Categories that recorded faster price growth include cereal products; fish and other seafood; oils and fats; milk, other dairy products and eggs; and the miscellaneous group ‘other food’.
Meat inflation retreated from its highest level in almost eight years, moderating to 11.4% from 11.7% in September.
Despite the lower reading, several meat products remain in double-digit territory, including stewing beef (30.9%), beef steak (27.9%), beef mince (27.1%), sausages (17.3%), boerewors (15.6%) and mutton (13.4%).
Not all was bad news on the meat front, however. Corned meat, fresh whole chicken and bacon are cheaper than a year ago.
Inflation for sugar, confectionery and desserts slowed to 3.5%, the lowest since March 2022 (3.4%). White and brown sugar, jam, peanut butter, and chocolate recorded lower rates.
Hot beverage inflation dipped to 8.8%, its weakest level since August 2023 (6.3%). In October, softer rates were recorded for black tea (5.1%), rooibos tea (1.6%) and cappuccino sachets (1.4%).
The annual rate for cereal products rose to 2.0% from 1.6% in September. Samp and maize meal recorded double-digit inflation in October, with maize meal reaching a four-month high at 10.7%.
Several products cost less than they did a year ago, including white rice, brown bread, hot cereals and instant noodles.
Although it is in deflationary territory, the milk, other dairy products and eggs category witnessed a rise from -1.6% in September to -1.5% in October.
A range of products carry a cheaper price tag than they did in the same month last year, including eggs, maize-based food drinks and several varieties of milk.
The graph below shows the food and beverage products that recorded the sharpest price increases and decreases in October.
Other notable price changes
The annual rate for transport turned positive following 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, with diesel declining by 0.7% and petrol rising by 0.2%.
This took the annual rate for fuel to 3.3%, the first positive reading since August 2024.
While the fuel price saw an 8c/litre lift, and so did not contribute to the inflation outcome, November’s fuel price change of a -51c/litre drop will aid inflation lower by about -0.1% m/m.
The index for recreation, sport and culture increased to 3.4% from 2.9% in September. The top 10 books sold across several retailers recorded an annual inflation rate of 59.4%.
Movie tickets increased by 15.8% and gym fees by 10.5% in the 12 months to October. However, ticket prices for sporting events declined by 12.6% over the same period.
Stats SA publishes inflation rates for each province and for different expenditure bands.
The province with the highest inflation rate in October was North West at 4.3%, and the lowest was Eastern Cape at 3.1%.
While the poorest typically experience higher inflation rates, in October the richest recorded the highest rate at 3.9%.
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