Inflation in South Africa is showing an upward trend this year. According to the Consumer Price Index (CPI) from Statistics South Africa, the average annual rate currently stands slightly above 4.0%, which is higher than the 3.2% recorded in 2025.
A recent series of fuel price increases pushed the CPI inflation to 4.5% in September. Economists now predict that this figure will reach approximately 5% by the end of the year.
Inflation and Interest Rate Forecasts
Investec Chief Economist Annabel Bishop expects the annual CPI inflation rate to approach 5.0% in the latter months of 2026 and also in January. However, a significant decrease in CPI inflation to 3.0% by June 2027 is anticipated, as figures will be compared against a high base driven by fuel price inflation in the second quarter of 2026. This forecast also depends on fuel price growth being contained in the first half of next year.
Potentially good news for consumers is the weakening expectation of further interest rate hikes; Bishop noted that no rate increase is expected at the Monetary Policy Committee (MPC) meeting in November. PSG Chief Economist Johann Els and Old Mutual Wealth Investment Strategist Isaac Odendaal also predicted that the rate would remain unchanged next month, with the latter stating that an additional hike is unnecessary given that the fuel-driven spike is likely to subside over time.
Bishop emphasized that much of the future depends on the duration of the Middle East war and its impact on oil and fuel prices both in South Africa and globally. She added that she does not expect the situation to last more than a year, but if it drags on, inflation forecasts will be higher.
Although temporary reductions in fuel levies should ease the situation by year-end, the expected October increase in petrol prices by 3.33 rand per liter is projected to add about 0.5% to the CPI monthly.
On the positive side, food inflation remained moderate, at around 1.0% year-on-year, thanks to food production benefiting from the La Niña phenomenon earlier this year. Meat inflation also significantly decreased after the containment of the foot-and-mouth disease outbreak.