Inflation cooled markedly in 2025, with the consumer price index averaging 3.2%, down from 4.4% in 2024 and comfortably within the Reserve Bank’s target range, signalling success in containing price pressures. Although inflation edged up slightly to 3.6% in December, economists say the overall outlook remains positive, helped by fuel price cuts, a stronger rand and lower global food prices. South Africa’s consumer price index (CPI) averaged a benign 3.2% in 2025, significantly slower than the 4.4% it averaged the previous year – a clear sign that the Reserve Bank’s (Sarb’s) quest to contain inflation is delivering results.
Inflation did quicken slightly to 3.6% on an annual basis in December from 3.5% in November, Statistics South Africa (Stats SA) said on Wednesday, 21 January 2026, but the overall trend is positive. The year-on-year rate for CPI ranged over the course of 2025 from a low of 2.7% in March to peaks of 3.6% in October and December, placing it firmly within Sarb’s new target range, which is effectively 2.0% to 4.0% with 3.0% the bullseye. Investec chief economist Annabel Bishop said CPI “is expected to drop back to the 3.0% inflation target this quarter”.
“January’s fuel price cut of -66c/litre will help lower inflation by about -0.2% month-on-month, while February is building for a larger -77c/litre cut, which will also help subdue some of the tendency of the start of the year’s inflationary pressures, from other sources.” Aiding and abetting this trend is a stronger rand, which on average has gained about 2.5% in 2026 to date, and falling global food prices. “Consumer price inflation is expected to near 3.0% year-on-year next month (February), then could dip below 3.0% year-on-year in Q2 2026 until Q4 2026, as food and energy prices remain low and the rand remains at its strong rates,” Bishop said. Meat prices are expected to continue to pick up, unfortunately.
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In a note on the CPI numbers, Nedbank economist Nicky Weimar said the bank expects inflation to drift moderately higher in the first quarter of 2026, peaking at about 3.7% before easing gradually toward 3%. On the domestic front, South African maize futures are near four-year lows, but the recent heavy rains could take a toll on yields for maize and other crops.
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