Inflation ticks up to 4.4% in August, but unlikely to have much bearing on rate call

Consumer inflation ticked up slightly to 4.4% in August from 4.3% in July, signalling a resumption of cost pressures stemming largely from global oil prices after the previous month’s sharp retreat.

Statistics South Africa published Wednesday’s data a few hours before the Reserve Bank announces its latest call on interest rates, but the August print is not likely to have much sway on the decision.

The main contributors to the 4.4% rate for August were housing and utilities, which registered a year-on-year rate of 5.2% and contributed 1.3 percentage points, followed by transport, which recorded 8.8% and accounted for 1.2 percentage points, Stats SA said.

Insurance and financial services inflation came in at 5.7%, adding 0.6 percentage points to the headline number.

On a month-on-month basis, the consumer price index did not shift between July and August.

The latest data follows a sharp slowdown in annual inflation to 4.3% in July after surging to 5% in June when a steep increase in domestic fuel prices translated to higher transport costs.

The June shock, announced in July, was not enough to sway the South African Reserve Bank’s (Sarb) decision on the benchmark interest rate a day later, with the monetary policy committee keeping it steady at 7%.

“Inflation is 200 basis points above target (3%), that is the last print. That is in the past. There is nothing we can do with last month’s inflation,” Sarb governor Lesetja Kganyago said at the time.

“Our focus is on inflation within the horizon. There is nothing monetary policy can even do with this month’s inflation, or next month’s inflation. Even the September inflation is outside of the monetary policy horizon, and that’s why you see us taking a view that takes you a few quarters ahead.”

In making its latest decision, the Sarb will likely pay more attention to last week’s Bureau for Economic Research (BER) report which showed inflation expectations moderated in the third quarter of 2026 despite a backdrop of continued geopolitical tensions in the Middle East which have disrupted oil supply through the Strait of Hormuz.

On average, expectations among analysts, businesspeople and trade union officials for headline consumer inflation in 2026 were unchanged at 4.4%, but eased to 4% from 4.2% for 2027 and to 3.8% from 3.9% for 2028, the survey showed.

Household forecasts declined sharply, with 12-month expectations falling to 4.9% — their lowest level in nearly five years — from 6%.

Further complicating Wednesday’s rates decision is the fact that the economy contracted by 0.2% in the second quarter of the year, backing the argument to keep rates on hold for now and offer some relief to consumers.