Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
September 17, 2025

Consumer Inflation

August 2025

In August 2025, the Consumer Price Index (CPI) experienced a modest increase to 3.3%, down slightly from 3.5% in July. This was marginally below analysts’ forecast of 3.6% for the month.

The rise was predominantly attributed to:

  • Housing and Utilities: Up by 4.3%, contributing 1.0 percentage point.
  • Food and Non-Alcoholic Beverages: Increased by 5.2%, adding 0.9 percentage points.

On an annual basis, inflation for goods edged up slightly to 3.1%, compared to 3.2% in July, while services inflation remained steady at 3.6% for August 2025. Although the pace of price increases has slowed, inflation continues to erode household purchasing power across South Africa, albeit at a reduced rate. As a result, many families are increasingly relying on short-term credit to sustain their lifestyles and consumption patterns. This dependence heightens their vulnerability to fluctuations in interest rates and currency values, which can influence domestic prices.

During its July meeting, the Monetary Policy Committee (MPC) decided to lower the interest rates. The outcome of the September interest rate decision, which will be announced later this week following the latest inflation data, is highly anticipated. It is expected that the South African Reserve Bank (SARB) may opt to keep interest rates unchanged for the month, despite the slight decline in consumer inflation from July to August. This approach could reflect the Bank’s cautious stance on inflation and price stability amid ongoing economic uncertainties, such as the 30% US trade tariffs impacting South African exports. These uncertainties could also influence the Rand’s exchange rate against the US dollar, as more data from August and September becomes available. The SARB may therefore adopt a “wait-and-see” approach to supporting the Rand and maintaining domestic price stability in the short to medium term.

The interest rate reductions implemented in late 2024 and early 2025, along with the July rate cut, are expected to stimulate demand by increasing household disposable income after interest payments, potentially fostering overall economic growth. This is supported by the latest economic growth figures of 0.8% released by StatsSA.

Despite this positive outlook and the slightly above-market expectation growth for the second quarter of 2025, the Reserve Bank remains cautious due to ongoing global uncertainties. Concerns such as inflation, the US-China tariff dispute, and potential additional tariffs on BRICS nations could impact price stability. Future interest rate decisions are likely to be influenced by factors such as moderate inflation, sluggish economic growth, improvements in electricity supply, and positive market sentiment.

Ultimately, maintaining price stability and safeguarding the domestic value of the Rand remain priorities as South Africa navigates the second half of 2025.

Back to News

More Coverage

The Fuel Shock Dilemma: Why the SARB’s Inflation Medicine May Hurt a Fragile Economy

For South African businesses and households already managing a tight financial squeeze, the South African Reserve Bank’s (SARB) recent decision to hike the repo rate to 7.0% felt less like economic medicine and more like a handbrake. While central banks traditionally raise interest rates to cool down an overheating economy, South Africa’s current reality is vastly different. Our recent inflation spike isn’t driven by a wild shopping spree, but by global supply shocks and an imported energy crisis. This begs the crucial question: is the SARB using the wrong tool for the job, and at what cost to our fragile economic growth?

The Core Dilemma: Demand vs. Supply and Interest Rates

The case for holding interest rates is strong, as South Africa’s current inflation is being driven by global supply-side pressures like fuel prices, not excessive local spending. Raising rates now would place additional strain on already struggling consumers and businesses without addressing the real cause of inflation. With the Rand strengthening, oil prices stabilising, and diesel costs expected to decline, natural inflation relief is already emerging. Since inflation remains within the SARB’s target range, increasing borrowing costs could unnecessarily slow economic growth and job creation.

A view on Demand in the Economy: Retail Sales performance – March 2026 Data

Amid a turbulent economic backdrop, South Africa’s retail sales surged by an unexpected 2.6% in March 2026, outpacing forecasts and signalling a fragile yet persistent recovery in the consumer market. While interest rate cuts have bolstered household spending, challenges such as rising inflation, potential interest rate hikes, and geopolitical tensions loom large. Despite these hurdles, sectors like “other retailers” and general dealers have notably contributed to this growth spurt, raising questions about the sustainability of this recovery. With business and consumer confidence indices displaying mixed signals, the future of South Africa’s retail strength hinges on international relations, fuel costs, and policy decisions. Explore the dynamics and implications of these developments in our detailed report.

Consumer Inflation Rate – 2026

In an insightful analysis of South Africa’s economic landscape in April 2026, the report delves into the notable 4.0% year-on-year increase in the Consumer Price Index, accentuated by surging costs in housing, utilities, transport, and financial services. Amid rising inflationary pressures fuelled by global uncertainties, including the Middle East conflict and climbing oil prices, the South African Reserve Bank faces critical decisions on interest rates to balance inflation and economic growth. As households grapple with diminished purchasing power, the precarity of reliance on short-term credit looms large, while international factors such as US-imposed tariffs and potential BRICS trade tensions threaten market stability. The report provides a comprehensive look at the delicate dance South Africa must perform to maintain price stability and safeguard the Rand amidst a challenging global backdrop.

The SARB’s High-Stakes Tightrope: Balancing an Inflation Breach Against a Jobless Crisis

Next week’s SARB decision could define South Africa’s economic trajectory: facing an external oil shock and runaway electricity tariffs that threaten to push April inflation past the central bank’s 4.0% ceiling, policymakers must weigh a technical inflation breach against a staggering surge in unemployment and collapsing investment, a choice between credibility and survival. With joblessness spiking and GDP growth stagnant, aggressive rate hikes would risk choking off the private investment the country urgently needs, while inaction could dent the new inflation-targeting framework. Read the full report for a detailed breakdown of the shocks driving this dilemma, the likely “hold” outcome from the May 28 MPC meeting, and what it means for businesses, households, and markets.