Headline consumer price inflation in South Africa rose to 3.5% in July 2025, up from 3.0% in June.
Consumer price inflation in South Africa climbs to 3.5%
This is the highest level in 10 months, last seen in September 2024 when inflation reached 3.8%. The main drivers behind the increase were higher food and petrol prices, according to Statistics South Africa.
For readers unfamiliar with the term, “inflation” simply means the rate at which the prices of goods and services increase over time. When inflation rises, it means that people are paying more money for the same basket of items compared to the previous year.
Food and non-alcoholic beverages became more expensive, rising to 5.7% in July compared to 5.1% in June. This means families are paying more for basics such as bread, milk, and vegetables.
Fuel prices also increased after four months of decreases (called deflation). Because fuel affects the cost of transporting goods, rising petrol and diesel prices often push up the prices of almost everything else.
Core inflation, which excludes food and energy because they tend to fluctuate a lot, was measured at 3.0%. This is slightly lower than what some economists had predicted (3.1%) and remains within the South African Reserve Bank’s (SARB) target range of 3% to 6%.
The Reserve Bank and interest rates
The SARB uses interest rates to control inflation. Lower inflation allows the Bank to reduce interest rates, making it cheaper to borrow money for businesses and households. In July, the Bank cut its main lending rate by 0.25 percentage points to 7.00%.
SARB Governor Lesetja Kganyago has been calling for a stricter inflation target of 3% instead of the current midpoint of 4.5%. The goal is to make South Africa’s economy more competitive by keeping price increases very low.
However, Finance Minister Enoch Godongwana has not yet approved this change and has said more consultation is needed.
Analysts warn of challenges ahead
Market analyst Zain Vawda from OANDA warned that rising costs for essentials like food and utilities could make it difficult for the Reserve Bank to reach its lower inflation target without raising interest rates again.
“Rising costs in essentials like food and utilities could make achieving a lower target difficult without significant policy interventions which may require SARB to begin increasing rates at some point,” he said.
Old Mutual’s chief economist, Johann Els, added that he expects interest rates to remain unchanged at the Bank’s next meeting in mid-September, while efforts continue to guide inflation closer to the preferred 3% mark.
For ordinary South Africans, the latest numbers mean higher living costs, especially at the supermarket and petrol station, albeit inflation is still within the Reserve Bank’s official target range.