South Africa’s inflation rose to 3.0% for the second consecutive month in December 2024

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January 23, 2025
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2 min read

South Africa’s Consumer Price Index, which measures the inflation rate, climbed slightly from 2.9% in November 2024 to 3.0% in December 2024 according to data from its official statistical office, Stats SA. 

December is the second month in a row to show an uptick in inflation, after rates rose by 0.1 percentage point in November from 2.8% recorded in October 2024. 

However, last month’s inflation rate was at the lowest end of the 3% to 6% range projected by the South African Reserve Bank (SARB), suggesting a possible slash in interest rates. 

Per Reuters, analysts familiar with the dynamics of the South African economy have predicted that the South African Reserve Bank will cut interest rates by 25 basis points when its Monetary Policy Committee meets on January 30.

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According to Stats SA, the major contributors to the country’s December inflation rates were housing and utilities and miscellaneous goods and services which grew by 4.4% and 6.6% respectively. Both sectors contributed 1.0 percentage point each to the monthly rate. 

Food and non-alcoholic beverages at 2.5% and alcoholic beverages and tobacco at 4.3% elevated inflation pressures by 0.5 and 0.3 percentage points, respectively. 

The agency also noted that “the average inflation rate for the year was 4.4%, down from the average of 6.0% in 2023. Inflation in 2024 was the lowest in four years since the pandemic in 2020 when the average rate was 3.3%.”

On a month-on-month basis, inflation in the country is expected to increase further, driven by an increase in the price of Premium Motor Spirit (petrol) in February. 

READ MORE   South African banks could increase lending in 2025 amid improved economic outlook 

Experts reveal that lower figures, seen during Q2 and Q3 of the year, were mainly driven by the significant drop in petrol price to R4.44 per litre. A subduing effect, they claim, has reached its end. 

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Fuel prices are expected to hit 80 cents per litre in February after oscillating between 12 to 17 cents per litre in December 2024 and January 2025. 

The SARB Governor, Lesetja Kganyago, has also cautioned that the bold tariffs announced by America’s newly sworn-in president, Donald Trump, could result in further price pressure. 

Like its economic counterpart, Nigeria, the Southern African country plans to rebase its CPI in January to enhance the quality of local economic data and boost its compatibility with international standards. The new base period for the inflation basket will be set to December 2024 according to Stats SA. 

A versatile and experienced writer who enjoys demystifying complex financial data for easy consumption.
A versatile and experienced writer who enjoys demystifying complex financial data for easy consumption.
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