The effects of the war in the middle East have yet to filter through to inflation.
Image: Markus Winkler | Pexels
South Africa’s annual consumer inflation rate increased to 3.1% in March from 3.0% in February, according to Statistics South Africa.
On a monthly basis, the consumer price index rose by 0.6% in March. The main contributors to annual inflation were housing and utilities, food and non-alcoholic beverages, and insurance and financial services, Statistics South Africa said.
Services inflation, including rent, housing, electricity, haircuts and insurance, accelerated to 4.2% year-on-year in March. This was a four-percentage-point increase from the February figure, while goods – food, clothing, and big-ticket items such as cars – inflation eased to 1.8% from 1.9%.
Ahead of the release, Kristof Kruger, head of fixed income trading at Prescient Securities, said the data would not yet fully reflect recent increases in fuel costs.
“That matters, because it means today’s print is likely to be lagging what’s already building in the system,” he said.
Investec chief economist Annabel Bishop also noted ahead of the release of the data that the effects of higher oil prices are expected to become more visible in upcoming figures.
“The jump in South Africa’s inflation outcome is only likely to come in April’s Consumer Price Index figures, released next month,” Bishop said. She said inflation is expected to rise towards 4% in the second quarter of 2026, driven by higher rand oil prices over March.
Bishop added that the extended conflict in the Middle East is affecting inflation expectations, particularly through its impact on oil prices and the currency. “The risk is to the upside for inflation on a longer war in the Middle East,” she said.
Markets are currently pricing in a 25 basis point interest rate increase by mid-year, with further moves dependent on how inflation evolves, said Bishop. The next Monetary Policy Committee meeting is next month.
“The market will get a number… but it may not get the truth,” Kruger said.
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