Skip to main content
Invest Now
012 012 5270
Copyright © Aluma Capital (Pty) Ltd. All rights reserved.
Aluma Capital (Pty) Ltd is a registered Financial Services Provider (FSP 46449) in terms of The Financial Advisory and Intermediary Services Act (37 of 2002)
Frederick Mitchell, Chief Economist | Aluma Capital (Pty) Ltd
Frederick Mitchell
September 18, 2024

Consumer Inflation slowing down further

Inflation eased from 4.6% in July to 4.4% in August 2024, aligning with market expectations. Month-on-month growth was minimal at just 0.1%. The rise in inflation for August was driven by:

  • Housing and utilities (including electricity and other administered prices), which increased by 4.8%, contributing 1.1 percentage points to inflation.
  • Miscellaneous goods and services, which rose 7.0%, adding 1.0 percentage point.
  • Food and non-alcoholic beverages, which increased by 4.7% year-on-year, contributing another 0.9 percentage points.
  • Transport services, which include fuel and maintenance costs, rising 2.8% and adding 0.4 percentage points to the overall inflation rate.

These increases were not unexpected, as these categories have significantly eroded consumer purchasing power since inflation began rising sharply in 2022. The ongoing inflationary pressures raise affordability concerns, as household income has not kept pace with rising prices, leading many families to take on more debt to maintain their standard of living. This higher indebtedness makes consumers even more vulnerable to interest rate hikes while they are already struggling with cost-of-living increases along with elevated debt payments.

It’s important to note that the price increases are not driven by rising domestic demand but rather by external factors, including electricity supply constraints, the costs associated with alternative power generation, and escalations in import prices, which are passed on to consumers through the market value chain.

While inflation continues to rise, it is doing so at a slower pace. Contributing factors to this moderation include:

  • An appreciation and increased stability of the Rand/Dollar exchange rate since the May 2024 elections, as investors and market participants have shown greater optimism following the formation of the Government of National Unity (GNU) and early policy signals.
  • Reduced power supply constraints, which have improved overall economic activity in South Africa during the second quarter of 2024.

Given the moderating inflation, better-than-expected economic growth, improved electricity supply, and enhanced market sentiment, the Reserve Bank is likely to lower interest rates in September 2024. This reduction may help boost demand slightly and contribute to stronger economic growth in South Africa than initially anticipated.

Back to News

More Coverage

The Core Dilemma: Demand vs. Supply and Interest Rates

The case for holding interest rates is strong, as South Africa’s current inflation is being driven by global supply-side pressures like fuel prices, not excessive local spending. Raising rates now would place additional strain on already struggling consumers and businesses without addressing the real cause of inflation. With the Rand strengthening, oil prices stabilising, and diesel costs expected to decline, natural inflation relief is already emerging. Since inflation remains within the SARB’s target range, increasing borrowing costs could unnecessarily slow economic growth and job creation.

A view on Demand in the Economy: Retail Sales performance – March 2026 Data

Amid a turbulent economic backdrop, South Africa’s retail sales surged by an unexpected 2.6% in March 2026, outpacing forecasts and signalling a fragile yet persistent recovery in the consumer market. While interest rate cuts have bolstered household spending, challenges such as rising inflation, potential interest rate hikes, and geopolitical tensions loom large. Despite these hurdles, sectors like “other retailers” and general dealers have notably contributed to this growth spurt, raising questions about the sustainability of this recovery. With business and consumer confidence indices displaying mixed signals, the future of South Africa’s retail strength hinges on international relations, fuel costs, and policy decisions. Explore the dynamics and implications of these developments in our detailed report.

Consumer Inflation Rate – 2026

In an insightful analysis of South Africa’s economic landscape in April 2026, the report delves into the notable 4.0% year-on-year increase in the Consumer Price Index, accentuated by surging costs in housing, utilities, transport, and financial services. Amid rising inflationary pressures fuelled by global uncertainties, including the Middle East conflict and climbing oil prices, the South African Reserve Bank faces critical decisions on interest rates to balance inflation and economic growth. As households grapple with diminished purchasing power, the precarity of reliance on short-term credit looms large, while international factors such as US-imposed tariffs and potential BRICS trade tensions threaten market stability. The report provides a comprehensive look at the delicate dance South Africa must perform to maintain price stability and safeguard the Rand amidst a challenging global backdrop.

The SARB’s High-Stakes Tightrope: Balancing an Inflation Breach Against a Jobless Crisis

Next week’s SARB decision could define South Africa’s economic trajectory: facing an external oil shock and runaway electricity tariffs that threaten to push April inflation past the central bank’s 4.0% ceiling, policymakers must weigh a technical inflation breach against a staggering surge in unemployment and collapsing investment, a choice between credibility and survival. With joblessness spiking and GDP growth stagnant, aggressive rate hikes would risk choking off the private investment the country urgently needs, while inaction could dent the new inflation-targeting framework. Read the full report for a detailed breakdown of the shocks driving this dilemma, the likely “hold” outcome from the May 28 MPC meeting, and what it means for businesses, households, and markets.

Mining Production and Sales for March 2026

In March 2026, South Africa’s mining sector showed promising growth, with activity up 2.5%, driven primarily by substantial increases in platinum group metals (PGM) and gold production. This article delves into the remarkable statistics, including a staggering 113.5% surge in platinum sales and a robust 30.2% increase in nominal mining sales, highlighting the industry’s crucial role in generating employment and foreign exchange for the economy. However, amid positive growth trends, the sector faces significant challenges, including geopolitical tensions, tariff measures, and the potential impacts of a changing global market. Discover how these dynamics affect one of the country’s key economic contributors and the overall outlook for the mining industry as South Africa navigates through a complex landscape of opportunities and hurdles. Read on for an in-depth analysis of the mining sector’s performance and its implications for South Africa’s economic future.