Groceries still bite, but less so: South Africa’s inflation cooled to an average 3.2% in 2025, keeping the CPI comfortably inside the Reserve Bank’s 2%–4% target band, even with December ticking up to 3.6%. Illustrative Image: Money. (Image: Istock) | Grocery basket. (Photo: Freepik) | (By Daniella Lee Ming Yesca) 
South Africa’s consumer price index (CPI) averaged a benign 3.2% in 2025, significantly slower than the 4.4% it averaged the previous year – a clear sign that the Reserve Bank’s (Sarb’s) quest to contain inflation is delivering results.
Inflation did quicken slightly to 3.6% on an annual basis in December from 3.5% in November, Statistics South Africa (Stats SA) said on Wednesday, 21 January 2026, but the overall trend is positive.
/file/attachments/2987/cpione_355351.jpg)
The year-on-year rate for CPI ranged over the course of 2025 from a low of 2.7% in March to peaks of 3.6% in October and December, placing it firmly within Sarb’s new target range, which is effectively 2.0% to 4.0% with 3.0% the bullseye.
What this means
This does not necessarily mean that Sarb will cut rates again when the Monetary Policy Committee (MPC) wraps up its first meeting of 2026 on Thursday, 29 January. But it bodes well for rate cuts as the year progresses. SA seems to be on the cusp of an age of lower inflation and interest rates.
Investec chief economist Annabel Bishop said CPI “is expected to drop back to the 3.0% inflation target this quarter”.
“January’s fuel price cut of -66c/litre will help lower inflation by about -0.2% month-on-month, while February is building for a larger -77c/litre cut, which will also help subdue some of the tendency of the start of the year’s inflationary pressures, from other sources.”
Aiding and abetting this trend is a stronger rand, which on average has gained about 2.5% in 2026 to date, and falling global food prices.
“Consumer price inflation is expected to near 3.0% year-on-year next month (February), then could dip below 3.0% year-on-year in Q2 2026 until Q4 2026, as food and energy prices remain low and the rand remains at its strong rates,” Bishop said.
Meat prices are expected to continue to pick up, unfortunately. In a note on the CPI numbers, Nedbank economist Nicky Weimar said the bank expects inflation to drift moderately higher in the first quarter of 2026, peaking at about 3.7% before easing gradually toward 3%.
“This temporary rise largely reflects the lower base established last year, with additional upward pressure coming from food and fuel prices. Food inflation will be driven primarily by meat prices, given the ongoing impact of foot-and-mouth disease. Progress in the rollout of vaccinations has been slow, frustrated by a shortage of vaccines. Even once administered, herd rebuilding will take time. As a result, we forecast double-digit meat price inflation until roughly April 2026,” he said.
On the domestic front, South African maize futures are near four-year lows, but the recent heavy rains could take a toll on yields for maize and other crops.
Read more: SA maize futures at four-year lows, good news for inflation, mixed outcomes for farmers
It all adds up to a positive outlook for South Africa’s inflation trajectory as Sarb strives to anchor expectations around the 3.0% level. DM