South Africa

South Africa Inflation October 2023

South Africa: Inflation hits five-month high in October

Inflation rose to 5.9% in October from September’s 5.4%. October’s result represented the highest inflation rate since May. Looking at the details of the release, the uptick was driven by stronger price increases for both food and transportation, which outweighed a milder rise in prices for housing and utilities.

Still, the trend pointed down, with annual average inflation falling to 6.2% in October (September: 6.4%). Meanwhile, core inflation fell to 4.4% in October from September’s 4.5%.

Finally, consumer prices increased by 0.89% over the previous month in October, picking up from the 0.63% increase recorded in September.

October’s headline inflation rise surprised markets on the upside, and the rand took a hit against the U.S. dollar as a consequence. Nonetheless, the South African Reserve Bank (SARB) opted to keep rates unchanged at its 21–23 November meeting, as core inflation cooled and headline inflation remained just within its 3.0–6.0% target band. While the tightening cycle may have ended, October’s data could signal a delay to the start of the loosening cycle, as risks to the inflation outlook are skewed to the upside.

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