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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
August 20, 2025

Consumer Inflation

July 2025

In July 2025, the Consumer Price Index (CPI) saw a modest rise to 3.5%, up from 3.0% in June. This was slightly above the analysts’ forecast of 3.4% for the month.

The increase was largely attributed to:

  • Housing and Utilities: Up by 4.3%, contributing 1.0 percentage point.
  • Food and Non-Alcoholic Beverages: Increased by 5.7%, adding 1.0 percentage point.

Annually, inflation for goods rose significantly to 3.2%, up from 2.3% in June. Meanwhile, services inflation slightly decreased to 3.6% in July from 3.7% in June. Despite the slower pace of price increases, inflation continues to reduce household purchasing power across South Africa. Consequently, many families are increasingly reliant on short-term credit to sustain their lifestyles and consumption habits. This reliance makes them more susceptible to variations in interest rates and currency values, which, in turn, impact domestic prices.

During its July meeting, the Monetary Policy Committee (MPC) decided to lower the interest rates. Further reductions are expected later in 2025 if inflation and expectations fall within the Reserve Bank’s “acceptable range.” These cuts have been supported by relatively low inflation, a stable Rand/Dollar exchange rate thus far, and reductions in international oil prices from May to July 2025.

The reduction of interest rates in late 2024 and early 2025, along with the recent cut in July, is anticipated to boost demand by increasing household disposable income after interest payments, potentially fostering overall economic growth. This trend is reflected in the retail sales figures for May to June 2025.

Despite this positive outlook, the Reserve Bank remains cautious due to persistent global uncertainties. Concerns about inflation, the ongoing US-China tariff conflict, and potential additional tariffs on BRICS nations could affect price stability. Future interest rate decisions are likely to be influenced by factors such as moderate inflation, slow economic growth, improvements in electricity supply, and positive market sentiment.

Ultimately, ensuring price stability while safeguarding the domestic value of the Rand remains a priority as South Africa progresses through the second half of 2025.

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