Inflation steady as central bank pushes for lower target

By Sfundo Parakozov and Alessandro Parodi

South Africa’s inflation rate was steady in May, staying below the central bank’s 3% to 6% target range as it pushes for the target to be lowered.

Headline consumer inflation stood at 2.8% year-on-year last month, unchanged from April and in line with the median forecast of economists polled by Reuters.

The South African Reserve Bank (SARB), which has cut interest rates at four of its last five policy meetings, stressed its preference for a lower target at its last meeting.

The finance minister would need to sign off on changing the inflation target, but discussions are at an advanced stage, Governor Lesetja Kganyago said last month.

Inflation has been below the midpoint of the target range – the current level the SARB aims for – since August 2024, and the bank believes lowering the target would make the economy more competitive.

Analysts agree.

“From the SARB’s perspective this will be the