South Africa’s inflation rate slowed slightly last January, and economists expect it to remain moderate, leaving open the possibility of further interest rate cuts by the central bank, Reuters reported on Wednesday, February 18.
According to the agency, overall consumer inflation slowed to 3.5% year-on-year in January, down from 3.6% in December 2025.
Analysts polled by Reuters had expected annual inflation to stand at 3.4% in January.
The modest slowdown keeps inflation within the 1 percentage point tolerance band around the 3% target set by the South African Reserve Bank (SARB).
An analysis by Statistics South Africa showed that the main contributors to January inflation were housing and utilities, food and non-alcoholic beverages, and insurance and financial services.
Investec chief economist Annabel Bishop said inflation is expected to be close to 3.0% in February and March before falling below that figure in the second quarter.
According to Bishop, markets expect the SARB to cut its benchmark interest rate by 25 basis points at its monetary policy meeting scheduled for March 26, in line with her bank’s outlook.
However, Jason Tuvey of Capital Economics said that a further rise in underlying inflation could make the central bank more cautious about cutting rates in March.
In the long term, spare capacity in the economy, lower oil prices, and the strength of the rand mean that Capital Economics forecasts cumulative cuts of 100 basis points in interest rates over the course of this year, Tuvey added.
Annual core inflation, which excludes volatile items such as food and energy, stood at 3.4% in January, its highest level in 11 months.
