South Africa

South Africa Inflation February 2024

South Africa: Inflation comes in at a four-month high in February

Inflation inched up to 5.6% in February from January’s 5.3%. February’s reading represented the highest inflation rate since October 2023 and surprised markets on the upside. Looking at the details of the release, the acceleration was driven by transportation prices rising at a quicker pace in February compared to the previous month, which outweighed price pressures for food and non-alcoholic beverages easing.

Still, the trend pointed down, with annual average inflation falling to 5.7% in February (January: 5.8%). Meanwhile, core inflation rose to 5.0% in February from the previous month’s 4.6%.

Finally, consumer prices rose 0.98% over the previous month in February, accelerating from January’s 0.09% rise. February’s figure marked the sharpest increase in prices since March 2023.

Inflation is seen gradually slowing from current levels through Q4 2024, when it should average below the mid-point of the South African Reserve Bank’s 3.0–6.0% target band. Still-high interest rates and a stronger rand will drive disinflation this year. Potential changes in fiscal policy ahead of and after the 29 May general election are a two-sided risk.

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