By Ebi Kesiena
South Africa’s annual inflation rate eased to 3.5 percent in January, reinforcing expectations that the country’s monetary authorities could consider lowering interest rates at their next policy meeting.
The latest figures were released on Wednesday by Statistics South Africa in a statement published on its official website. The marginal drop from 3.6 percent recorded in December edges inflation closer to the South African Reserve Bank’s 3 percent target and sets the stage for key monetary policy deliberations scheduled for March.
The data reflects a mixed trend across major consumer categories, particularly within food items, where price movements varied significantly.
On a year-on-year basis, consumer prices rose by 3.5 percent in January, slightly down from 3.6 percent in December. While the overall rate moderated, food inflation held steady at 4.4 percent for the third consecutive month, underscoring persistent pressures in certain segments of the market.
However, disaggregated figures reveal notable easing in several food sub-categories. The annual inflation rate for cereal products slowed sharply to 0.6 percent in January, down from 2.1 percent in December. White rice recorded a deflation rate of 11.0 percent, marking its eleventh straight month of declining prices.
Similarly, maize meal inflation dropped significantly to 2.6 percent from 9.5 percent the previous month, indicating substantial relief in a key staple. Prices for oils and fats also softened to 4.0 percent from 4.6 percent in December. Within this category, olive oil was 7.9 percent cheaper than a year ago, while butter prices declined by 0.7 percent.
Despite these improvements, meat prices continued to rise, partially offsetting gains recorded in other food segments and maintaining upward pressure on household grocery bills.
With inflation trending downward and approaching the central bank’s lower target band, analysts are closely watching the March meeting for signals on potential monetary easing. A rate cut could provide stimulus to the economy, particularly as policymakers balance inflation containment with growth support.
The January data strengthens the case for cautious optimism, but the trajectory of food prices and broader cost pressures will remain critical factors in shaping the next policy move.
