By Thebe Mabanga
South Africa’s inflation rate edged slightly upwards in September, in line with market expectations, pushed upwards partly by housing costs and utilities
On Wednesday, Statistics South Africa reported that the Consumer Price Index (CPI) for September edged up to 3.4 % year on year, up from 3.3 % in August.
This significantly reduces any prospect of a rate cut in November as the National Treasury and the South African Reserve Bank mull over a new inflation target while the latter has clearly expressed its preference for a lower anchor of the target around the current lower end of the inflation target of 3%.
“Annual inflation accelerated across several product categories, most notably transport and restaurants & accommodation,” Stats SA said in a statement.
“In contrast, food & non-alcoholic beverages (NAB); alcoholic beverages & tobacco; and furnishings, household equipment & routine maintenance recorded lower rates.”
Meat inflation continued to surge due to foot and mouth disease while milk and eggs are cheaper than a year ago.
In a research note to clients, Nedbank pointed to housing and utilities inflation as one of the key drivers of inflation, as it increased from 4.3% to 4.5%, contributing 1.1 percentage points to overall inflation.
At the same time, the year-on-year increase in electricity and other fuels remains high but moderated from 8.7% to 8.2%.
Stats SA notes that meat inflation reached 11.7%, the highest annual rate since January 2018, when it was13.4%.
This due to the outbreak of foot and mouth disease, which has impacted of beef specifically, with stewing beef for example rising by 32.2 %.
Stats SA further notes that most varieties of milk were cheaper.
For example, prices for fresh full-cream milk decreased by an annual 2.1%.
Egg prices were also lower, with the annual rate for eggs dropping further to -8.2% from -6.7% in August.
“The average price of a box of 18 eggs, for example, was R62,58 in September 2025, down from R69,36 in September 2024.”
Goods inflation fell from 3.1% year on year to 2.9%, driven by lower non-durable and durable goods prices, while services inflation increased.
Core inflation, which is closely watched by the Reserve Bank, went up from 3.1% to 3.2%, “although underlying demand pressure remains muted,” according to Nedbank.
Nedbank forecast inflation to edge towards 4% by year end, elevated by meat prices.
“The persistence of foot-and-mouth disease and slow vaccination progress will keep meat prices high for longer. Even with vaccination efforts, it will take time for farmers to restore their herds to pre-outbreak levels,” the bank says.
Food prices increase will be countered by good weather, which has yielded good crops harvest.
A major concern for inflation is electricity prices, which are expected to increase by 12.7% in the current financial year and 8% for the next two years.
This will filter through manufacturing and service costs.
“Although inflation is expected to rise, it will remain relatively muted, averaging 3.3% in 2025. Thereafter, we expect inflation to rise to an average of 4% in 2026, before gradually moderating to 3.4% in 2027,” says Nedbank, in an outlook roughly in line with the Reserve Bank.
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