South Africa’s headline consumer inflation increased slightly to 2.9% year-on-year in November from 2.8% in October, although food prices cooled to a 14-year low.
The latest inflation rate is still below the lower point of the South African Reserve Bank’s target range of 3% to 6%.
According to data released by Statistics South Africa on Wednesday, the November print is the first uptick in year-on-year inflation in nine months.
Annual inflation for food and non-alcoholic beverages retreated sharply to 2.3% in November from 3.6% the previous month, the lowest rate for the category since December 2010, when it stood at 1.6%.
Eight of the 11 food groups registered lower rates, including vegetables; milk, eggs and cheese; hot beverages; bread and cereals; cold beverages; meat; sugar, sweets and desserts; and “other” foods. Fish inflation was flat, while oils and fats as well as fruit recorded steeper price increases.
The Bureau for Economic Research (BER) had predicted an acceleration to 3.2% for November while Nedbank economists forecast 3.1%.
Reacting to the data, Standard Bank group head of South Africa macroeconomic research Elna Moolman said the downside surprise was largely a result of lower food inflation than expected.
“This implies that there is significant relief for consumers with inflation quite low and lower than most consumer’s income growth. This underscores our expectation that there will be an ongoing recovery in consumer spending in the coming months,” she said.
“It also clearly vindicates the [Reserve Bank’s] decision to start cutting interest rates and signals that there is scope to continue cutting interest rates in 2025.”
The Reserve Bank’s monetary policy committee cut interest rates by 25 basis points to 7.75% last month, following a similar reduction in September, which was the first decrease in four years.
The committee’s next meeting is scheduled for 30 January 2025.
On Wednesday, Stats SA also calculated inflation rates for 10 expenditure categories, providing insight into the effect of inflation on various socio-economic groups.
The agency found that the poorest households have shouldered the highest inflation rate since January 2022, peaking at 11.3% in April 2023. This declined to 3.8% in November 2024 but remains the highest across all expenditure categories. By contrast, the wealthiest households registered an annual increase of 3% in November, slightly above the headline rate.
In November the provinces with the highest inflation rates were Western Cape (3.4%), Free State (3.2%) and KwaZulu-Natal (3.1%). Inflation in Western Cape remained above the headline rate for the period January to November 2024.
Limpopo (2.4%) and Mpumalanga (2.5%) recorded the lowest rates.
