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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
April 23, 2025

Consumer Inflation

March 2025

In March 2025, the Consumer Price Index (CPI) fell to 2.7% from 3.2% in February, under the 3.0% forecast.

This decrease was mainly due to:

  • Housing and Utilities: Up 4.4%, contributing a 1.0 percentage point.
  • Food and Non-Alcoholic Beverages: Up 2.7%, adding a 0.5 percentage point.
  • Restaurants and Accommodation Services: Up 4.2%, adding another 0.3 percentage point.

Year-over-year, goods inflation was 2.0%, down from 2.5% in February, and services inflation eased to 3.5% from 3.8%. Despite slower price increases, inflation continues to reduce household purchasing power across South Africa, leading many to rely on short-term credit, increasing their vulnerability to interest rate changes.

On a positive note, the Monetary Policy Committee (MPC) cut the interest rate by 25 basis points in January but maintained it in March. The Reserve Bank remains cautious about inflation and interest rates, especially due to the US-China tariff war’s potential impact on price stability. Factors like moderate inflation, slow economic growth, improved electricity supply, and positive market sentiment influence the Bank’s interest rate decisions. However, price stability is a primary concern, determining future interest rate cuts in late 2025.

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Manufacturing Production

August 2025
In August, South Africa’s manufacturing output further declined by 1.5%, following a 1.3% decrease in July. This downturn was significantly below market expectations, which had forecasted a 0.3% increase for August. The Purchasing Managers’ Index (PMI) also fell by 1.4 points, from 50.8 in July to 49.5 in August 2025, indicating a less favourable business climate anticipated by manufacturers for the month.

Reviving South Africa’s Economy

A Balanced Path to Growth, Jobs, and Prosperity
South Africa faces significant economic challenges that threaten the nation’s stability and future prosperity. Over the past decade, sluggish growth, high unemployment—particularly among the youth—and infrastructure decay have become critical issues. These problems are compounded by inconsistent policies, energy shortages, and a prevailing uncertainty in the investment climate. The African National Congress (ANC) has recognised this urgency, unveiling a ten-point plan aimed at revitalising the economy. While this approach shows a concerted effort to address systemic issues, a complementary set of reforms proposed in the Alternative Economic Blueprint offers a promising pathway toward sustainable growth, job creation, and economic freedom.

Gold and Foreign Exchange

September 2025
The South African International Liquidity Position, measured by Net Gold and Foreign Exchange Reserves, showed growth in both USD and Rand terms for September 2025.

Private Sector Credit Extension (PSCE)

August 2025
In August 2025, credit demand grew by 5.9%, slightly below the anticipated market prediction of 6.0% for the month. Since the initiation of interest rate cuts in September 2024, there has been a noticeable acceleration in overall credit growth, with most subcategories showing increases, particularly in July.

Internation Trade and Trade Balance

August 2025
International trade measures South Africa’s demand for foreign goods and services relative to its demand for domestically produced products in the global market.
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