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Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
March 6, 2026

Producer Price Inflation – January 2026

In January 2026, producer price inflation fell from 2.9% in December to 2.2% after minor revisions to producer price category weights. However, producer inflation fell by 0.2% month-on-month. Significant cost increases were noted in the following categories:

  • Food and Beverage Production: Increased by 2.2% and contributed 0.7 percentage point,
  • furniture and other manufacturing: Rose by 12.2% year-on-year while contributing 0.5 of a percentage point.

Production costs for intermediate goods rose by 10.5% in January, following a 10.1% increase in December. This indicates a clear inflationary trend that requires attention, as these increases exceed the South African Reserve Bank’s (SARB) new inflation target range of 2% to 4%. Annual growth is still significantly influenced by base effects from the 2024/25 data.

In the primary sector, mining costs climbed by 28.4% in January, following a 25.7% rise in December. In contrast, the agriculture sector experienced a further 5.8% decline, following a 5.0% decrease in December.

Overall, the trend in producer price inflation for final manufactured goods supports positive inflation expectations in South Africa for the short to medium term. Consumer inflation remains low at 3.5% for January, closely aligned with SARB’s target of 3%. While prices for certain intermediate goods—particularly water and electricity—exceed the target range, current figures suggest consumer inflation will likely remain low and stable in the near future.

This stability has allowed the Reserve Bank to lower interest rates at the November Monetary Policy Committee (MPC) meeting while keeping the rate unchanged during the January 2026 meeting, as both consumer and producer inflation expectations appear well-managed at this time. The Bank’s interest rate decision will consider both the Consumer Price Index (CPI) and Producer Price Index (PPI) when analysing inflation expectations for the first quarter of 2026.

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Why Hiking Interest Rates on Imported Inflation Will Stifle South Africa’s Fragile Economy

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Producer Price Inflation – July 2026

South Africa’s producer price inflation eased from 7.5% to 5.7% year-on-year in July 2026, but the slowdown offers little comfort as rising fuel, energy and intermediate-goods costs continue to reverberate through the economy. With petroleum-related products driving much of the increase, mining costs still elevated, and consumer inflation already above the South African Reserve Bank’s new target range, inflationary pressures remain firmly entrenched, even as monthly producer prices declined. This report examines the sectors driving the latest figures, the implications of ongoing Middle East-related energy shocks, and what the data could mean for consumer prices, inflation expectations, and the Reserve Bank’s upcoming interest-rate decision in September.

Inflation Relief, Real-Economy Headwinds, and the Geopolitical Imperative for South Africa

South Africa has received a much-needed inflation reprieve, with July headline inflation easing to 4.3% and giving the South African Reserve Bank room to hold interest rates steady, but monetary relief alone cannot rescue an economy facing contracting mining and manufacturing sectors, depressed investment, mass unemployment, and mounting pressure on export earnings. This report examines how a 12.5% US tariff and a 56% annualised plunge in exports are intensifying the country’s economic vulnerability, while diplomatic disputes over property rights, empowerment policy, rural safety, political rhetoric, and South Africa’s geopolitical alliances threaten access to the strategically vital US market. It also sets out the practical policy choices, from structural reform and infrastructure investment to pragmatic trade diplomacy, that could determine whether South Africa converts this brief moment of inflation stability into sustainable growth or slips deeper into stagnation

Consumer Inflation – July 2026

South Africa’s July 2026 inflation reading delivered a genuine surprise: consumer prices rose just 4.3% year-on-year, well below June’s 5.0% and under the 4.5% the market had pencilled in, yet the story beneath that headline is far more complicated than a simple cooling trend. Goods inflation has slipped into the SARB’s new 2–4% target band, but services inflation stubbornly holds at 5.0%, revealing that price pressure is now entering the economy through a channel monetary policy struggles to reach. Meanwhile, housing, transport, and financial services drove the bulk of the increase; fuel costs remain elevated amid the renewed Middle East conflict and rising oil prices; and households and businesses relying on short-term credit are dangerously exposed to any shift in rates, the rand, or import costs. Add US tariffs weighing on manufacturing, fragile 0.5% first-quarter growth, and a Reserve Bank that has already wrong-footed markets twice this year, and the run-up to the 23 September MPC meeting becomes anything but predictable. This report unpacks what the numbers actually signal, why the SARB is holding its nerve, and what it will take to tip the next rate decision either way.