Annual consumer price inflation in South Africa increased to 4.5% in September, up from 4.4% in August. This rise was caused by the fuel price crisis, which led to a sharp increase in transport costs.
According to the latest Consumer Price Index (CPI) data published by Statistics South Africa (Stats SA) on Wednesday, the transport sector contributed 1.5 percentage points to the monthly inflation figure. Nevertheless, the overall inflation level was lower than expected by many leading analysts, who had forecast CPI growth of 4.6%–4.7% year-on-year.
Stats SA reported that transport costs rose by 10.8% year-on-year. From January to September, the price of gasoline increased by 6.13 rand per liter, and the cost of 500ppm diesel jumped by 10.66 rand after the Middle East war led to an increase in oil prices.
However, the situation was not negative across all sectors. Inflation in the food and non-alcoholic beverages segment grew by only 1.2% year-on-year and decreased by 0.1% month-on-month. The cost of medical services increased by 3.2% annually, while insurance and financial services rose by 5.4%, and housing and utilities by 5.2%; the latter added 1.3 percentage points to the overall CPI figure.
A positive development was the slowdown in rental inflation from 4.1% to 3.9% year-on-year. Johan Els, senior economist at PSG, noted that there is still little evidence of a second round of inflationary pressure.
Els emphasized that besides the direct impact of higher gasoline prices, there was some increase in transport expenses, including taxis and public transport, but acknowledged the absence of signs of broader price pressure in other areas. He added that this would be viewed positively by the Central Bank. He forecasts that inflation may rise slightly above 5% in October and November, but basic effects are expected to start reducing inflation around April next year. 'By the second half of 2027, we could return to a level of around 3% or even lower. Much will depend on the scale of the oil price reduction, which I expect next year, and the corresponding decrease in gasoline prices,' Els concluded.