Inflation slows, boosting case for rate cut

South African inflation eased in January, edging closer to the central bank’s 3% target, bolstering the case for an interest-rate cut when policymakers meet next month.

Read: Would a 3% inflation target push interest rates higher?

Consumer prices rose 3.5% year on year, compared with 3.6% a month earlier, Pretoria-based Statistics South Africa said in a statement on its website on Wednesday. The median estimate of 15 economists in a Bloomberg survey was 3.4%.

Read: SA back from the brink, now for the hard part – Hendrik du Toit

The outcome may encourage the central bank’s monetary policy committee to lower borrowing costs on 26 March. The MPC left the benchmark rate unchanged at 6.75% last month because of concerns about global uncertainty and the risk that higher food and electricity prices may derail its revised 2026 inflation forecast of 3.3%.

Read: Sarb errs on the side of caution, holds rates steady

Meat prices have surged and are likely to remain elevated in the near term as South Africa battles an outbreak of foot-and-mouth disease in cattle, said Paul Makube, a senior agricultural economist at FirstRand’s First National Bank.

Read: Gold regains ground after two-day drop in thin holiday trading

Of the 14 economists surveyed by Bloomberg this month, a majority expect policymakers to lower borrowing costs next month by 25 basis points. Bolstering that view is the rand’s more than 3.7% gain against the dollar this year as gold and platinum — key exports — have rallied. In addition, oil prices are averaging about $61 a barrel, $4 less than the central bank’s 2026 assumption.

© 2026 Bloomberg

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