SA consumers prices hold steady at 3.2% y/y in February

South Africa's latest Consumer Price Index data for February 2025 revealed that headline consumer price inflation remained constant at about 3.2 per cent, unchanged from the previous month. Despite this steady figure, there were signs of ongoing pressures in key sectors, with a slight month-on-month increase of 0.9 per cent. Keabetswe Mojapelo, a Macroeconomist at Rand Merchant Bank, shared insights on the sectors contributing to these persistent inflation pressures. Mojapelo highlighted that while inflation had dipped slightly in certain areas, rising food and non-alcoholic beverage prices offset this decline. The deflation in fuel prices also slowed down, resulting in less inflationary pressure. Additionally, Mojapelo pointed out that government-related sectors, particularly administered prices like electricity and water rates, were showing increases, adding to overall inflation. He emphasized the importance of monitoring core inflation, which reflects tempered consumer demand and the impact of exchange rates on imported goods. The interview also delved into the differences in inflation rates between provinces like Western Cape and Gauteng, with Mojapelo attributing varying rates to factors like tourism and business activities. The discussion further explored how lower-income households were disproportionately affected by rising food and transport costs, while upper-income households faced demand-related challenges amid stagnant incomes. Mojapelo noted that continued interest rate cuts could potentially stimulate demand, but the effectiveness of such policy measures depended on various factors like real interest rates and consumer credit behavior. Looking ahead, Mojapelo stressed the need for accelerated structural reforms in key sectors like electricity and transportation to drive economic growth and job creation. He underscored the significance of prudent fiscal and monetary policy decisions to support household consumption and overall economic recovery. Despite global uncertainties, he expressed optimism that a combination of targeted reforms and policy support could help bolster South Africa's economic prospects in the coming year.