Consumer prices in South Africa moderated in January 2026, with headline inflation easing to 3.5 per cent year-on-year, down from 3.6 per cent in December, according to Statistics South Africa. This marks the tenth consecutive month of slowing inflation, bringing the rate within the Reserve Bank’s target band of 3–6 per cent. The monthly Consumer Price Index (CPI) rose by 0.2 per cent, unchanged from December, indicating that overall price growth is stabilising rather than accelerating.
The easing provides households with some respite from rising living costs, and reinforces the view among economists that inflationary pressures may continue to moderate in the coming months. Core inflation, which strips out volatile food, fuel, and energy prices, remained steady at 3.4 per cent, signalling underlying stability in the economy.
READ ALSO: South Africa’s Jobs Market Improves: What Comes Next?
The decline in headline inflation was largely driven by falling fuel prices. The fuel index dropped 3.7 per cent year-on-year, with inland petrol averaging R20.75 per litre, the lowest since early 2022. Diesel prices fell by 5.4 per cent, providing relief for transport-dependent sectors and household budgets.
Food prices presented a mixed picture. Staples such as cereals, dairy, and eggs saw slower increases or outright deflation, while white rice prices fell 11 per cent year-on-year, while maize meal inflation more than halved. Conversely, meat prices continued to climb sharply. Beef rose 31 per cent, with stewing beef and mince up 30 per cent and 28 per cent, respectively, while pork increased by nearly 20 per cent, reflecting ongoing supply constraints in the livestock sector. These divergent trends highlight the uneven impact of inflation on essential goods.
The South African Reserve Bank (SARB) maintained the repo rate at 6.75 per cent, after cumulative cuts of 100 basis points in 2025. The moderation in headline inflation and steady core inflation strengthens the case for further monetary easing. Analysts now expect a 25-basis-point reduction at the March 2026 policy meeting, with additional cuts possible if inflation continues to ease and economic growth remains resilient.
Policymakers are balancing the need to maintain price stability with support for economic activity, particularly as domestic consumption and investment remain key drivers of growth.
South Africa’s inflation developments reflect a broader global trend of easing price pressures. In the United Kingdom, consumer prices fell to around 3 per cent in January 2026, raising expectations of interest rate reductions. Globally, this disinflationary environment provides central banks with room to stimulate growth while maintaining stability.
For South Africa, moderated inflation creates opportunities for lower borrowing costs, increased investment, and stronger consumer spending. However, external risks, including commodity price volatility and currency fluctuations, continue to influence monetary policy decisions.
Outlook: Measured Relief Amid Persistent Pressures
While the January CPI figures signal relief, structural price pressures remain. Elevated meat prices, housing costs, and utility expenses continue to challenge household budgets, particularly among lower-income groups. Sustained price stability will require both careful monetary policy and structural interventions targeting supply constraints and essential goods affordability.
The January 2026 inflation data, easing to 3.5 per cent, represents an important inflection point. It offers potential monetary relief while underscoring the ongoing need for targeted interventions to manage essential costs. How the Reserve Bank navigates these dynamics in the March policy meeting will set the tone for the economy in the months ahead.
