South Africa’s inflation rises to 3.0% for the second straight month in December 2024
South Africa’s inflation rate, as measured by the Consumer Price Index (CPI), edged up to 3.0% in December 2024, marking a slight increase from 2.9% in November 2024, according to data from Stats SA. This marks the second consecutive month of rising inflation, following a 0.1 percentage point increase from 2.8% in October 2024.
Despite the uptick, December’s inflation rate remains at the lower end of the South African Reserve Bank’s (SARB) projected target range of 3% to 6%. This suggests that the SARB may consider cutting interest rates, with analysts predicting a 25 basis point reduction when the Monetary Policy Committee meets on January 30, 2025, as reported by Reuters.
Stats SA indicated that the main drivers behind December’s inflation were housing and utilities, which rose by 4.4%, and miscellaneous goods and services, which saw a 6.6% increase. Both sectors contributed 1.0 percentage point each to the overall inflation rate. Additionally, food and non-alcoholic beverages increased by 2.5%, while alcoholic beverages and tobacco rose by 4.3%, contributing 0.5 and 0.3 percentage points, respectively.
The agency also noted that the average inflation rate for 2024 was 4.4%, a decrease from 6.0% in 2023. This marks the lowest inflation rate in four years, since the pandemic period of 2020, when the average was 3.3%.
Looking ahead, inflation is expected to rise further on a month-to-month basis, driven by a planned increase in the price of Premium Motor Spirit (petrol) in February 2025. Experts note that lower inflation figures observed in the second and third quarters of 2024 were largely influenced by a significant drop in petrol prices, which fell to R4.44 per litre. However, that effect is now fading, and fuel prices are expected to rise by 80 cents per litre in February, after fluctuating between 12 to 17 cents per litre in December 2024 and January 2025.
SARB Governor Lesetja Kganyago has also warned that potential trade tariffs announced by U.S. President Donald Trump could add further pressure on prices.
In another key update, South Africa plans to rebase its CPI in January 2025 to improve the accuracy of its economic data and align it more closely with international standards. The new base period for the inflation basket will be set to December 2024, according to Stats SA.
