CPI for June 2025

After holding steady at 2.8% in April and May, South African inflation picked up in June, as the central bank prepares to review interest rates. Annual consumer price inflation was 3.0% in June, in line with economist expectations as polled by Reuters.

The CPI increased by 0.3% month-on-month. Inflation has remained subdued near the floor of the central bank’s target range, but risk is potentially now to the upside.

The annual rate for food & non-alcoholic beverages reached a 15-month high of 5.1% in June. Meat – particularly beef – continues to be the main driver of food inflation. Other unprocessed food items also saw an uptick. The annual rates for fruits & nuts and vegetables remained in double-digit territory for a second straight month. Fuel prices continued a downward trajectory, declining for a fourth consecutive month. Fuel is on average 11.2% cheaper than a year ago. In June, the annual inflation rate for goods was 2.3%, up from 1.8% in May; and services was 3.7%, up from 3.6% in May.

South African central bank chief Lesetja Kganyago's concerns about dollar depreciation due to US tariffs and deflation in China cloud the local inflation outlook. The weakening dollar has far-reaching implications for emerging economies like South Africa. Kganyago also warned that if implemented, tariffs are likely to impact the agricultural and automotive sectors, which bodes badly for domestic economic activity.

Current uncertainty has economists divided on what South Africa’s monetary policy committee may do at the rate-setting meeting next week. The bank has cut its repo rate twice this year, including at its last meeting in May. Some expect it to extend its easing cycle given inflation has been contained near or below the floor of the MPC’s target range of 3% to 6% for eight consecutive months. Others expect a pause.