South Africa Inflation Rises to 2.8% in April Driven by Food Prices

South Africa's headline consumer price index (CPI) inflation rose slightly to 2.8% year-on-year in April 2025, up from 2.7% in March, primarily driven by higher food and non-alcoholic beverage prices, especially meat and coffee. Despite this increase, inflation remains below the South African Reserve Bank's (SARB) target range of 3% to 6%, with core inflation reaching its lowest level since mid-2021. The modest inflation rise contrasts with economists' expectations of steady or slightly lower inflation and has sparked debate about the future of interest rates, with some experts anticipating a 0.25 percentage point cut at the upcoming Monetary Policy Committee meeting, while others expect rates to remain unchanged. A potential announcement of a lower inflation target in the upcoming budget has contributed to a stronger rand and may influence the SARB to maintain current rates longer. The inflation uptick was partly offset by declining fuel prices, which fell by 3.2% month-on-month, easing some cost pressures. Overall, the inflation trend and policy outlook reflect cautious optimism about easing monetary conditions amid ongoing economic challenges.