South Africa’s annual consumer inflation rose to 4.4% in August from 4.3% in July, while the consumer price index (CPI) was unchanged month on month. Economists differed on whether fuel-price pressures justified another 25-basis-point interest-rate increase.
Consumer inflation is a broad concept referring the overall rise in the cost of living. CPI refers to the prices of a basket of consumer goods and services typically purchased by households. Stats SA said annual consumer inflation increased to 4.4% in August 2026, from 4.3% in July. The CPI was unchanged month on month.
Food and non-alcoholic beverage inflation rose to 1.1% from 0.9%, while fuel inflation continued to ease.
Professor Waldo Krugell, an economist at North-West University Business School, said the key issue was whether price pressures were spreading beyond fuel.
“The thing to look for is price pressure beyond fuel prices, and there is still little evidence of that,” he said. “Goods inflation is slightly down from July. Services inflation is slightly up, but the month-on-month changes are mostly zero.”
“This leaves the MPC with a difficult decision. There is still not much evidence of an inflation process taking hold.”
Krugell said the economy appeared to be moving into an adverse scenario, with oil prices near $100 ((R1625) a barrel and no clear end to the conflict in the Middle East.
Some commentators expect another 25-basis point rise in the repo rate in November,” added Krugell.
PSG senior economist Johann Els said the August inflation figure was slightly below market expectations of between 4.5% and 4.6%.
“That was a good outcome,” he said. “However, this has no impact on the MPC decision that we will hear later today. The MPC completed its forecasting and modelling work last week and has probably already made its decision.”
Els said the detail was encouraging. Food inflation remained low, although it increased slightly from 0.6% in July to 0.7% in August.
He said annual inflation remained negative for cereal products, fruit and nuts, and vegetables, while inflation in meat, sugar and milk remained low.
Core inflation declined from 4.2% in July to 4.1% in August. The three-month annualised rate for core inflation fell from 6% in July to 4.5%.
Els said inflation remained subdued in several consumer-goods categories, including clothing and footwear at 1.1%, furniture at minus 1%, vehicles at 0.8% and appliances at minus 2.2%.
The weighted average inflation rate for clothing, footwear, furniture, appliances and vehicles was 0.6% year on year, he said.
“There was virtually no second-round impact from the higher fuel prices we have seen since April,” Els said. “There has been a direct impact on petrol, diesel and other transport costs, but no meaningful impact on other consumer goods or food inflation.”
Dr Elna Moolman, Standard Bank Group’s head of South African macroeconomic research, said lower fuel prices in August helped contain headline inflation.
“Generally, we did not see much inflation pressure in August. This is a welcome indication that we are not seeing the feared second-round inflationary impact of the significant increase in fuel costs this year,” she said.
However, Moolman said fuel prices had increased significantly in September and were expected to rise again in October.
“This means the Reserve Bank will likely remain concerned about the potential for second-round effects,” she said.
Moolman said the Reserve Bank could raise interest rates by another quarter of a percentage point, after which the hiking cycle could end. She expected rates to remain elevated for some time before possible rate relief during 2027.
Investec chief economist Annabel Bishop said August inflation rose to 4.4% year on year, with no monthly change, partly because of base effects.
She said fuel inflation fell to 20.6% year on year, from 23.3% in July and 35.3% in June.
“Fuel prices remain a key driver of CPI inflation in South Africa,” Bishop said.
She said higher petrol prices in September and October could prevent inflation from falling in the short term.
Bishop said core inflation declined to 4.1% year on year, from 4.2% in July. She put the probability of a 25-basis-point hike at slightly above 50%.
Frank Blackmore, lead economist at KPMG South Africa, said higher oil and refined-product prices were putting upward pressure on transport costs.
He said inflation remained above the Reserve Bank’s 3% target and that continued pressure on transport costs could prompt further repo-rate increases.
yogashen.pillay@nationalmg.co.za