South Africa: Inflation rises slightly faster than expected in April
Latest reading: Inflation rose to 2.8% in April, above March’s 2.7% and slightly exceeding market expectations. Despite the rise, inflation remained below the lower bound of the South Africa Reserve Bank (SARB)’s 3.0–6.0% target band. Looking at the details of the release, prices for food and non-alcoholic beverages—which account for a little over 18% of the consumer price index basket—increased at a quicker pace, outweighing a sharper fall in prices for transport.
The trend pointed down mildly, with annual average inflation coming in at 3.6% in April (March: 3.8%). Meanwhile, core inflation edged down to 3.0% in April from March’s 3.1%.
Finally, consumer prices rose 0.30% in April over the previous month, slowing down from March’s 0.40% rise. April’s result marked the weakest reading since December 2024.
Outlook: Our Consensus is for inflation to inch up from current levels in May–June, returning within the SARB’s target range. Later in the year, our panelists see price pressures gradually rising further in Q3 and Q4 to reach around the midpoint of the SARB’s target.
Overall this year, our Consensus is for inflation to average below 2024’s level and the lowest since 2020. The impact of past interest rate hikes and a stronger year-on-year rand versus the U.S. dollar will help contain price pressures. That said, robust wage growth and faster private consumption growth will exert upward pressure. Upside risks include extreme weather and power cuts.