South African (SA) inflation rose slightly in December, as expected, but analysts said they still expect the central bank to deliver several interest rate cuts this year as price pressures remain well contained.
Headline consumer inflation increased to 3.6% year on year in December from 3.5% in November, as predicted by analysts polled by Reuters.
The modest rise keeps the headline rate within the 1% point tolerance band of the central bank’s 3% target, and the statistics agency said average inflation for 2025 of 3.2% was the lowest in 21 years.
Annual core inflation, which strips out volatile items like food and energy, came in at 3.3% in December, in line with economists’ forecasts.
At its last monetary policy meeting in November, the SA Reserve Bank (SARB) cut its main lending rate by 25 basis points to 6.75%, and its next policy announcement is scheduled for January 29.
“With real rates still quite high, and the inflation outlook both benign and continuing to improve, there should be scope for the SARB to ease policy further,” Elna Moolman, Standard Bank’s Head of SA macroeconomic research, told Reuters.
–Reuters–
