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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
December 13, 2024

Consumer Inflation

November 2024

Inflation in South Africa rose slightly from 2.8% in October to 2.9% in November, driven mainly by housing and utilities, food, and miscellaneous goods. Despite price increases, there are signs of slowing growth. The MPC’s recent 25 basis point interest rate cut may ease financial pressures on consumers, supporting future demand and economic momentum.

Inflation in South Africa saw a slight increase from 2.8% in October to 2.9% in November, despite no monthly inflation reported during this period. The rise in November was primarily driven by:

  • Housing and Utilities: Up 4.7%, contributing 1.1 percentage points
  • Miscellaneous Goods and Services: Up 6.6%, adding 1.0 percentage point
  • Food and Non-Alcoholic Beverages: Up 2.3%, contributing 0.4 percentage points
  • Alcoholic Beverages and Tobacco: Up 4.5%, adding 0.3 percentage points

While these categories continue to experience price increases, the rate of growth is slowing. However, rising costs still strain household budgets, eroding consumers’ purchasing power and dampening demand, as reflected in various monthly economic statistics. Many households are increasingly relying on credit to maintain their lifestyles, raising their vulnerability to interest rate hikes and rising product prices.

It’s important to note that these price increases are primarily driven by external factors rather than domestic demand, including electricity supply issues, costs associated with alternative power generation, and rising import prices passed on to consumers. The recent depreciation of the rand following Donald Trump’s re-election may also have short-term impacts on its value.

On a positive note, the Monetary Policy Committee (MPC) lowered the interest rate by 25 basis points in November, slightly less than the 50 basis points economists had expected. This reduction may help relieve some financial pressures on consumers and stimulate demand in the medium term. With moderating inflation, sluggish economic growth for Q3 2024, improved electricity supply, and sustained positive market sentiment, the South African Reserve Bank (SARB) is likely to consider further interest rate cuts in early 2025 to maintain current economic momentum and support the positive market environment.

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Private Sector Credit Extension (PSCE): August 2026

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