South Africa’s inflation remained unchanged at 3.2% in February, marking the fourth consecutive month above the four-and-a-half-year low of 2.8% recorded in October 2024, according to data from Statistics South Africa published on Wednesday.
The consumer price index (CPI) rose by 0.9% month-on-month, driven by higher food and fuel prices.
Food and non-alcoholic beverage inflation accelerated to 2.8% from 2.3% in January, while fuel prices climbed 3.9% month-on-month. The annual fuel inflation rate, though still negative, improved to -3.6% from -4.5% in January.
The inflation data comes ahead of the South African Reserve Bank’s (SARB) monetary policy announcement on Thursday, with analysts divided on the central bank’s next move.
While some economists expect a rate cut, others believe the bank will hold rates steady given rising global risks.
“The Monetary Policy Committee will likely adopt a ‘wait and see’ approach, given the global uncertainty at the moment,” Angelika Goliger, EY Africa’s chief economist, told Bloomberg.
One of the key risks is heightened trade tensions between the U.S. and its major trading partners, which could impact investor sentiment and global financial markets.
Additionally, domestic uncertainty surrounding South Africa’s stalled national budget has raised concerns over fiscal policy direction.
For the first time since the end of apartheid, the budget process has been delayed due to divisions within the ruling coalition.
The deadlock has increased uncertainty among investors, with potential implications for economic growth and inflation in the months ahead.
Despite the stability in inflation, SARB has repeatedly warned that risks remain. The bank continues to monitor global economic shifts, domestic fiscal pressures, and cost drivers such as electricity, wages, and food prices.
With the inflation rate still well below the SARB’s preferred midpoint of 4.5%, the central bank faces a policy dilemma—balancing economic growth with the need to maintain price stability. Investors and financial markets will be watching closely for any signals on the bank’s future policy stance.
