Inflation: What the Numbers Actually Mean for South Africans

What CPI measures — and what it misses

The Consumer Price Index (CPI) measures the average change in prices paid by urban South African households for a fixed basket of goods and services. Stats SA collects data from thousands of outlets across the country each month.

The basket is weighted to reflect how the average urban household spends money. Housing and utilities account for the largest weight (around 24%), followed by food and non-alcoholic beverages (17%), transport (15%), and miscellaneous goods and services (14%).

This weighting matters. A household that spends a larger-than-average share of income on food — as lower-income households typically do — will experience inflation differently from the headline figure. When food inflation was above 14% in early 2023, the effective inflation rate for poor households was significantly higher than the headline CPI.

“The "average" inflation rate can mask very different experiences across income groups.”

Why 2025 was a low-inflation year

South Africa's annual average CPI fell to 3.2% in 2025 — the lowest full-year average since 2004. Several factors converged.

Global commodity prices, which had spiked after Russia's invasion of Ukraine in 2022, normalised significantly. Fuel prices fell as oil prices moderated. Food inflation, which had been running above 14% in early 2023, eased dramatically as global grain prices retreated and the rand stabilised.

The SARB's aggressive rate hiking cycle — which took the repo rate from 3.5% in late 2021 to 8.25% by mid-2023 — had its intended effect: demand-pull inflation was squeezed out of the economy. The cost, however, was significant: higher borrowing costs weighed on economic growth and on mortgage-holders.

The good news is that the SARB had been easing rates until early 2026, though upside inflation pressures subsequently prompted hikes to 7.00% in May and 7.25% in September 2026.

Food inflation: the numbers households feel most

Food prices are the inflation measure most South Africans feel most viscerally. When meat, bread, and cooking oil become more expensive, the impact is immediate and unavoidable — especially for the 40% of households who spend more than 40% of income on food.

Food CPI peaked at 14% in early 2023. By September 2026 it had eased to 1.2% — one of the lowest readings in years. The improvement reflects lower global grain prices, a stronger rand, and strong domestic agricultural output.

However, absolute prices have not fallen — they have simply stopped rising as fast. The cumulative price increase since 2021 means the food basket still costs significantly more in rand terms than it did before the inflation surge.

“Lower inflation means prices are rising more slowly — not that prices have fallen.”

The mid-2026 rebound: inflation rises toward 5%

After a period of easing, inflation accelerated in mid-2026. Headline CPI rose to 4.0% in April and peaked at 5.0% in June before moderating to 4.5% in September 2026.

The primary culprits were fuel prices, electricity tariffs, and municipal service adjustments. Transport CPI swung into positive territory as global oil and domestic petrol prices climbed, while Eskom's annual tariff adjustment pushed housing and utility costs higher.

In response to persistent upside risks, the SARB raised the repo rate to 7.00% in May 2026 and further to 7.25% in September 2026, maintaining a vigilant stance on its 3% target.