South Africa's inflation creeps higher as soaring food and housing costs bite

22

January 2025

Market News Macro Economic Insights

Adriaan Pask

Chief Investment Officer, PSG Wealth

South Africa’s annual inflation rate increased to 3% in December from 2.90% in November of 2024.
However, the rate came in below market expectations of 3.20%.
The upward pressure was mainly driven by the prices of miscellaneous goods and services (6.60%,
unchanged from November), housing and utilities (4.40%, down from 4.70%), and food and non-alcoholic beverages (2.50%, up from 2.30%).
The core inflation rate edged down to 3.60% in December 2024, the lowest since February 2022,
compared to 3.70% in November.
Consumer prices increased by 0.10% on a monthly basis in December 2024.

At 10h44, the JSE index registered a 0.27% gain, reaching approximately 85 075, continuing its upward trajectory as investors absorbed the potential implications of Trump’s inauguration. This sustained momentum reflects market optimism amid key political developments.
The rand gained by 0.15% to R18.47/$ on Wednesday morning, and by 0.09% to R19.26/€ and 0.15% to R22.80/£ by 11h10.
South Africa’s 2-year government bond yield was recorded at 7.57%,while the 5-year and 10-year yields rose to 8.44% and 9.24%, respectively.

Although inflation accelerated in December, driven by continued pressures from housing and food costs, the overall rate remains within the South African Reserve Bank's target range of 3%-6%, indicating it is still manageable.
The central bank reduced interest rates at its last two meetings of 2024, and many analysts anticipate another cut at its first monetary policy announcement of this year, scheduled for next Thursday.
The next release date for CPI data is scheduled for Wednesday, 19 February 2025.