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
October 31, 2025

Producer Price Inflation

September 2025

In September 2025, producer price inflation increased to 2.3%, up from 2.1% in August. On a monthly basis, however, producer prices declined slightly by 0.1%. Notably, costs for food and beverage production rose once again by 3.8%, contributing 1.1 percentage points to the monthly increase.

In September 2025, producer price inflation increased to 2.3%, up from 2.1% in August. On a monthly basis, however, producer prices declined slightly by 0.1%. Notably, costs for food and beverage production rose once again by 3.8%, contributing 1.1 percentage points to the monthly increase.

The previous deflationary trend in producer inflation appears to have ended, with only petrol prices continuing to decline—petrol prices decreased by 1.8% on an annual basis in September 2025.

In September 2025, producer price inflation increased to 2.3%, up from 2.1% in August. On a monthly basis, however, producer prices declined slightly by 0.1%. Notably, costs for food and beverage production rose once again by 3.8%, contributing 1.1 percentage points to the monthly increase.

The previous deflationary trend in producer inflation appears to have ended, with only petrol prices continuing to decline—petrol prices decreased by 1.8% on an annual basis in September 2025.

Production costs for intermediate goods rose by 7.6% in September, following a 6.5% increase in August. This indicates a clear inflationary trend that warrants attention. This level of increase exceeds the South African Reserve Bank’s (SARB) inflation target range of 3% to 6%. Additionally, the month-on-month increase of 1.1% further suggests that inflationary pressures are beginning to manifest in the manufacturing of intermediate goods. The annual growth is still largely influenced by base effects from 2024 data.

The primary contributor to the monthly increase was Basic and Fabricated Metals, which rose by 2.8%, adding 1.5 percentage points to the overall figure.

In the primary sector, mining costs grew by 16.0% in September, following an 8.5% increase in August. Conversely, the agriculture sector experienced a 2.1% decrease after a 3.0% rise in August.

Overall, the trend in producer price inflation for final manufactured goods remains supportive of favourable inflation expectations in South Africa in the short to medium term. Consumer inflation remains low at 3.4% for September, closely aligning with the SARB’s target of 3%. Although prices for certain intermediate goods—particularly water and electricity—are still above the target range, current figures suggest that consumer inflation is likely to remain low and stable in the near future. This stability may provide the Reserve Bank with room to consider further interest rate reductions later in 2025, as both consumer and producer inflation expectations appear to be well managed at present.

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.