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

Consumer Inflation

September 2025

In September 2025, the Consumer Price Index (CPI) saw a modest rise to 3.4%, slightly up from 3.3% in August, yet just below the analysts’ forecast of 3.5%.

This increase was largely due to:

  • Housing and Utilities: An increase of 4.5%, contributing 1.1 percentage points.
  • Food and Non-Alcoholic Beverages: Up by 4.5%, adding 0.8 percentage points.

Year-on-year, inflation for goods eased from 3.1% in August to 2.9% in September, while services inflation rose from 3.6% to 3.9%. Although the rate of price increase has slowed and remains relatively stable near 3.5%, inflation continues to erode household purchasing power in South Africa, though at a slower pace. Consequently, many families are increasingly dependent on short-term credit to maintain their consumption habits, which makes them more vulnerable to interest rate and currency fluctuations affecting domestic prices.

During its September meeting, the Reserve Bank’s Monetary Policy Committee (MPC) chose to keep interest rates unchanged, despite stable consumer inflation from July to August. This decision likely reflects the Bank’s cautious approach to inflation and price stability amid lingering economic uncertainties, such as the 30% US trade tariffs affecting South African exports. These uncertainties may also affect the Rand’s exchange rate against the US dollar as more August and September data emerge. Thus, the SARB may adopt a “wait-and-see” strategy to support the Rand and maintain domestic price stability in the short to medium term.

The interest rate cuts introduced in late 2024 and early 2025, along with a reduction in July, are anticipated to boost demand by increasing household disposable income after interest payments, potentially fostering economic growth. This outlook is supported by StatsSA’s latest economic growth figure of 0.8%.

Despite an optimistic growth outlook that slightly exceeds market expectations for the second quarter of 2025, the Reserve Bank remains vigilant due to ongoing global uncertainties. Issues like inflation, the US-China tariff conflict, and possible further tariffs on BRICS nations could affect price stability. Future interest rate decisions are likely to consider factors such as moderate inflation, sluggish economic growth, enhancements in electricity supply, and positive market sentiment.

In summary, maintaining price stability and protecting the Rand’s domestic value remain key priorities as South Africa navigates the latter half of 2025.

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