Another Rate Cut Likely On Muted South African Inflation

Headline consumer inflation ticked up to 3 year on year in December from 2.9 in November, with housing and food major contributors, Statistics South Africa data showed on Wednesday. Economists polled by Reuters had expected a rate of 3.2, still well below 4.5 the level the South African Reserve Bank aims for.

The smaller-than-expected rise in South Africas headline inflation rate combined with the recent recovery in the rand, supports our view that the Sarb can continue with its easing cycle, said David Omojomolo, Africa economist at Capital Economics. Average inflation for 2024 was 4.4, the lowest level in four years.

We expect inflation to drift higher in 2025 but remain below 4.5 for most of the year. The upward pressure will mainly emanate from food and fuel prices, Nedbank economists said in a research note. Tannur Anders and Sfundo Parakozov, c 2025 Reuters