PPS Investments: CPI for January 2025

Consumer prices rose by 3.2% in January, aligning with the anticipated increase. This adjustment follows the revisions made by the statistics office to the data utilised for calculating household expenditure.

The statistics agency reduced the survey list to 391 items from 396, reclassified five indexes, incorporated insurance and financial services, and designated December 2024 as the new reference period.

Inflation averaged 2.9% over the final quarter of 2024, representing the lowest level since the second quarter of 2020 and falling below the current 3% to 6% target range. In January 2025, the annual inflation rate for goods stood at 2.4%, an increase from 1.9% in December 2024. Conversely, the services inflation rate declined to 4.0%, down from 4.2% in December 2024. The housing and utilities index contributed significantly to the inflationary surge, surging by 4.5%. Insurance prices experienced an 8% increase, while financial services saw a 5.5% rise. This category collectively accounts for 10.4% of the revised consumer price index basket.

South African policymakers implemented a 25 basis point reduction in interest rates to 7.5% last month, following two quarter-point reductions in 2024. South African Reserve Bank Governor Lesetja Kganyago cautioned that escalating tariffs pose a risk to the global economy and may hinder the disinflation process, potentially disrupting central banks’ interest rate-cutting cycles. The market now anticipates a 24% probability of a 25 basis point reduction of the policy rate at the SARB’s upcoming meeting scheduled for March 20.