South Africa inflation edges up but economists see more rate cuts soon

South Africa's headline inflation rate edged up in September, but the increase was smaller than expected and economists said they thought the central bank could restart interest rate cuts soon.

Source: Reuters.

Headline consumer inflation quickened to 3.4% in annual terms from 3.3% in August, below the median forecast of 3.5% in a recent poll.

A breakdown by Statistics South Africa showed the main drivers of the marginally higher rate were housing and utilities and food and non-alcoholic beverages, which both came in at 4.5% year-on-year last month.

Analysts said the inflation rate could continue to rise modestly in the remainder of 2025, but not to the extent the central bank will be worried.

A stronger rand exchange rate, falling inflation expectations and a sluggish economy could all encourage the South African Reserve Bank (Sarb) to ease monetary policy further, they say.

The Sarb has already delivered three interest rate cuts this year, but it paused at its last policy meeting in September to assess the impact of previous cuts.

It has forged ahead with policy easing despite announcing in July that it would effectively target 3% inflation, while the finance minister has not formally changed its 3%-6% target range.

The Sarb's next monetary policy announcement is scheduled for Thursday, 20 November 2025.