South Africa Inflation Holds at 2.8% in May as SARB Eyes Lower Target

BREAKING NEWSJune 18, 2025 at 11:05 AM UTC

TLDR

South Africa’s annual consumer inflation held steady at 2.8% in May, unchanged from April
Core inflation, which excludes volatile items such as fuel and food, also remained unchanged at 3.0%
This comes as SARB signals interest in revising its inflation target downward, citing the prolonged period of low price growth

South Africa’s annual consumer inflation held steady at 2.8% in May, unchanged from April and remaining below the South African Reserve Bank’s (SARB) official 3–6% target range, according to data released Wednesday by Statistics South Africa. Monthly inflation rose 0.2%.

Core inflation, which excludes volatile items such as fuel and food, also remained unchanged at 3.0%. This comes as SARB signals interest in revising its inflation target downward, citing the prolonged period of low price growth. Inflation has remained below the 4.5% midpoint since August 2024.

Prices for food and non-alcoholic beverages increased 4.8% year-on-year, while housing and utilities rose 4.5%. Transport costs fell 4.8% over the same period, helping to anchor the headline rate.

SARB has cut rates at four of its last five meetings. Governor Lesetja Kganyago recently stated that discussions to lower the inflation target are at an advanced stage, but a formal decision requires approval from the finance ministry.

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Points clés à retenir

South Africa’s stable inflation environment is prompting policymakers to revisit the country’s inflation framework. With the consumer price index now consistently below the midpoint of the 3–6% target and core inflation subdued, SARB is making the case to formally lower its target band to better align with macroeconomic conditions and global competitiveness goals. Analysts view this as a rare window of opportunity. Anchoring expectations now could reinforce monetary credibility while supporting long-term price stability. Lower inflation targets could also pave the way for sustainably lower interest rates. For businesses, it could reduce borrowing costs and support capital investment. For consumers, it could improve affordability and boost spending. However, the shift would require strong political alignment. While SARB has maintained policy discipline, final approval rests with the finance ministry. If approved, the move could redefine South Africa’s monetary framework and further stabilize the macroeconomic environment.

South Africa

Inflation

SARB

Interest Rate

Economy

Consumer Prices

Food Prices