JOHANNESBURG, July 22 – South Africa’s annual inflation accelerated more than expected in June, strengthening market expectations that the South African Reserve Bank (SARB) could raise interest rates at its next monetary policy meeting.
According to Statistics South Africa, headline consumer inflation increased to 5.0% year-on-year in June, up from 4.5% in May. It marks the highest annual inflation rate since June 2024, when inflation stood at 5.1%.
On a monthly basis, consumer prices rose 0.7% between May and June, matching the increase recorded in the previous month.
The latest inflation data prompted traders to increase expectations that the central bank may tighten monetary policy as inflation moves closer to the upper end of the SARB’s target range.
Transport was the largest contributor to both annual and monthly inflation, reflecting a sharp increase in fuel prices.
Annual transport inflation accelerated to 12.7% in June from 9.4% in May, while fuel prices climbed 34.3% over the past year. The increase was driven by a 50.8% rise in diesel prices and a 31.7% increase in petrol prices.
Higher fuel costs also pushed up passenger transport prices. Passenger transport inflation rose 8.1% during the month, lifting the annual rate to 12.5% from 4.0% in May.
Among the largest monthly increases were minibus taxi fares, which rose 11.5%, followed by e-hailing services at 8.7%, long-distance bus fares at 8.4%, and school transport at 3.7%.
In contrast, food inflation continued to ease. Annual inflation for food and non-alcoholic beverages slowed to 1.6% in June from 1.9% in May and 2.9% in April.
Cereal products recorded a fifth consecutive month of deflation, falling 1.5% compared with a year earlier. Prices also declined for several staple foods, including white rice (-13.4%), maize meal (-5.9%), samp (-1.5%), and porridge (-1.3%).
Meat inflation also moderated further. Annual inflation for meat eased to 5.1%, down from 13.5% recorded in January. Beef mince inflation slowed to 3.9%, while stewing beef entered deflation, declining 2.7% year-on-year.
Pork prices remained elevated despite easing for a third consecutive month, recording annual inflation of 13.9%, while inflation for mutton and lamb increased to 8.4%. Among processed meat products, sausages recorded annual inflation of 11.8%, corned meat rose 10.2%, and bacon increased 8.6%.
Hot beverage prices also remained under pressure. Inflation in the category reached 7.4% in June, extending a trend that has kept annual price growth above 6% since mid-2022. Black tea prices increased 8.3%, while instant coffee rose 7.0% compared with a year earlier.
Housing costs also continued to rise. Statistics South Africa reported that actual rental prices increased 1.1% from the first quarter, resulting in annual rent inflation of 4.1%.
Townhouse rents recorded the fastest annual increase at 5.4%, followed by flats (4.6%) and houses (3.7%).
The latest inflation figures reinforce expectations that the South African Reserve Bank may maintain a cautious monetary policy stance as it seeks to contain inflationary pressures while supporting economic growth. Investors will closely watch the central bank’s next interest rate decision for further guidance on the country’s inflation outlook.
