South Africa’s annual consumer price inflation edged up to 4.4% in August 2026 from 4.3% in July, Statistics South Africa reported on Wednesday 23 September, as a 52 cent cut in the petrol price was outweighed by a R1.23 a litre increase in diesel. Prices were unchanged from July on a monthly basis.
Economists had expected a slightly higher 4.5% for headline inflation, according to Engineering News. Core inflation, which strips out food, non-alcoholic beverages, fuel and energy, came in at 4.1%, just below the 4.2% forecast.
## What pushed prices up
Three categories did most of the work, as Business Day set them out. Housing and utilities rose 5.2% over the year and contributed 1.3 percentage points to the headline rate. Transport rose 8.8% and contributed 1.2 points. Insurance and financial services rose 5.7% and contributed 0.6 points.
Transport was the largest single driver, IOL reported. Transport prices fell 0.4% in August, yet the category remains inflationary because fuel costs are about 20% higher than a year ago and passenger transport services are up 11.6%. BusinessTech put fuel inflation at 20.6% year on year in August, easing from 23.3% in July.
The split in fuel prices was sharp. Petrol fell 52 cents a litre in August, while diesel, which powers heavy vehicles and much of the goods transport chain, rose R1.23 a litre.
## Food is the soft spot
Food prices were subdued. Food and non-alcoholic beverages rose just 1.1% over the year, and food alone rose 0.7%, according to IOL. Fish and seafood rose 7.5%, meat 1.5% and cereal products 1.9%. Annabel Bishop of Investec said food prices were providing deflationary pressure because agricultural production had fallen 6.6% year on year, per BusinessTech. Engineering News noted that strong crop production should help contain food inflation, although an anticipated El Nino weather pattern is a risk.
Dr Elna Moolman of Standard Bank called the result “a welcome indication that we’re not seeing the feared second-round inflation impact of the significant increase in fuel costs this year,” according to BusinessTech. She cautioned that fuel price increases in September and October remain a risk. Bishop described fuel as “a key driver of CPI inflation in South Africa”.
## The Reserve Bank moved the same day
The inflation release came hours before the Reserve Bank’s Monetary Policy Committee announced its decision. Johann Els, chief economist at PSG Financial Services, said the data would have no impact on the decision: “This has no impact on the MPC decision that we will hear later today.”
The committee raised the repo rate by 25 basis points to 7.25% and the prime lending rate went to 10.75%, effective 25 September 2026, according to the Reserve Bank’s statement. The vote was unanimous. The bank had surprised markets in July by holding rates steady, citing its already restrictive stance, Engineering News noted.
The statement puts the bank’s inflation target at 3%, with a one percentage point tolerance band, and expects inflation to stay elevated into early 2027 before returning to 3% towards the end of 2027. It named fuel and services costs as the main pressures. Petrol was showing an average under-recovery of R2.83 a litre at the time of the statement. Food inflation is at its lowest since 2010 because of strong harvests, and import prices are being held down by a resilient rand.
The bank cited the conflict in the Middle East and the Russia-Ukraine war as causing “large, negative and persistent” inflationary pressure worldwide, and said major central banks including the European Central Bank, the Bank of Japan and the US Federal Reserve are raising rates. The economy contracted 0.2% in the second quarter of 2026 and the bank now projects annual growth of 1.2%, down from 1.4%. The next MPC decision is due on 19 November 2026.
## Expectations
Households taking part in the Bureau for Economic Research survey now expect inflation of 4.9% over the next year, down from 6%, while professional analysts project 3.4% by 2028, IOL reported.
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