18
June 2025
South Africa’s inflation rate holds steady at 2.80% in May 2025
Adriaan Pask
Chief Investment Officer, PSG Wealth
Event
• South Africa’s annual inflation rate held steady at 2.80% in May 2025, unchanged from the rate in April 2025.
• Food and non-alcoholic beverages (NAB) was the only category to contribute to the monthly increase in the inflation rate. The monthly change in food and NAB was 1.10%, following a 1.30% rise in April. The annual rate for the category rose to 4.80% from 4% in April – the highest reading since March 2024, when the rate stood at 5.10%.
• Fuel prices fell by 1.10% between April and May, bringing the annual rate down to 14.90%. This marks the largest annual decrease in fuel prices since October 2024, when the rate was 19.10%. Petrol is now 15.90% cheaper and diesel 12.60% cheaper than a year ago.
• Transport prices also declined sharply (-4.80% vs -3.90%).
• On a monthly basis, the Consumer Prices Index (CPI) rose by 0.20%, slightly below the 0.30% increase recorded in April, marking the smallest monthly rise in five months.
• The annual core inflation rate rose to 3% in May 2025, compared with the same month in the previous year.
The Impact
• Following the announcement, the South African rand traded in the red against the dollar, coming in at R18.05/$ at 11h31.
• Meanwhile, South Africa's main stock market index, the SAALL, fell to 94 173 points on June 18, 2025, losing 0.51% from the previous session.
• South African 5-year and and 10-year bond yields were at 8.60% and 10.09%, respectively. While the 30-year bond yield came in at 11.13%.
The Assessment
• With the inflation rate remaining unchanged and well below SARB’s target range, it may support expectations of future interest rate cuts to stimulate the economy.
• Easing monetary policy could serve as a tool to stimulate domestic demand and support economic growth, particularly amid ongoing concerns around infrastructure constraints and global uncertainty.
• Our solutions remain centred on actively managed fund strategies, leveraging expertise from both local and international portfolio managers. These strategies are developed to deliver strong performance, especially when considering inflationary trends.
• South Africa’s next inflation rate figures will be released on Wednesday, 23 July 2025.