South Africa's CPI inflation nudges higher, hinting at challenges beneath the surface

South Africa’s annual consumer price inflation edged higher in December 2025, as housing-related costs and food prices continued to exert pressure on household budgets, Statistics South Africa said.

Headline consumer price inflation rose to 3.6% year-on-year in December, up from 3.5% in November, according to the agency’s latest consumer price index (CPI) release. On a month-on-month basis, prices increased by 0.2%.

Housing and utilities remained the largest contributor to annual inflation, while food and non-alcoholic beverages also continued to add upward pressure, the data showed.

Annabel Bishop, Investec’s chief economist, noted that it was unlikely that there would be an interest rate cut next month even though inflation is expected to slow. Investec had predicted 3.5%.

Bishop said inflation is expected to drop back to the 3% inflation target this quarter. Bishop noted fuel made only a small contribution to the monthly outcome.

“The fuel price saw a small 29c/litre lift, making a small 0.07% contribution to the month-on-month CPI outcome. Housing and utilities made a small, not unusual, 0.1% seasonal contribution as well," said Bishop.

Food inflation remained unchanged at 4.4% year-on-year in December. Bishop said global and currency dynamics continued to help contain price pressures.

“Global food prices fell 1.3% month-on-month in December, and the rand strengthened by 2.4% month-on-month against the US dollar, making a substantial contribution to keep food inflation contained,” she said.

Dr Elna Moolman, head of South Africa macroeconomic research at Standard Bank Group, said inflation remained “quite benign” at the end of last year.

“Consumer inflation remained quite benign at the end of last year, at 3.6% year-on-year in December from 3.5% in November,” Moolman said.

“For consumers, the data implies ongoing relief from benign food inflation at 4.4% year-on-year. We expect food inflation to remain quite benign this year, underpinned by both favourable global and domestic dynamics.”

However, she said there were emerging risks in some categories.

“That said, we are monitoring the impact of regional floods quite closely, as this could affect certain crops,” Moolman said.

Moolman added that while fuel continued to provide relief, rental inflation was becoming more noticeable.

“Consumers also continue enjoying relief from fuel prices, which increased only 1.6% year-on-year. However, this is the second consecutive quarterly survey in which rental inflation increased quite noticeably,” Moolman said.

Johann Els, chief economist at PSG Financial Services, said ahead of the release of the data that the inflation outcome was expected to remain within the Reserve Bank’s target range.

Els anticipated the December print coming in at 3.7% off the back of “moderate” food inflation.

Els said rental inflation remained a key area to watch. “They spiked a bit in the previous quarterly survey in September, and they probably go a little bit higher on a year-on-year basis still, so that is a bit of an unknown,” he said.

Despite this, he said broader inflation pressures remained subdued.

“I expect consumer goods inflation to remain moderate,” Els said. “I don’t think there’s anything serious apart from that”.

The agency’s next CPI release is scheduled for February 2026.

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