South Africa experienced a 5.3% annual consumer price inflation rate in March 2024, which decreased from February 2024’s 5.6%. Today, Stats SA released the inflation data for March 2024, indicating a 0.8% month-on-month increase in the consumer price index.
Key contributors to the 5.3% annual inflation rate included housing and utilities (which rose by 5.9% year-on-year), miscellaneous goods and services (up by 8.5% year-on-year), food and non-alcoholic beverages (increasing by 5.1% year-on-year), and transport (up by 5.3% year-on-year). Additionally, the yearly inflation rate for goods in March was 5.7%, down from 6.2% in February 2024.
The services rate increased from 4.9% in February 2024 to 5.0% in February 2024. Since November 2021, when the current cycle of rate hikes began, the South African Reserve Bank has raised interest rates by a total of 475 basis points in an effort to bring inflation within its target range.
At its meeting in July 2023, the Monetary Policy Committee opted to halt the cycle of rate hikes, even though South Africa’s repo rate had been at its highest point in almost 15 years—8.25%—since May of the previous year.
March’s inflation was primarily influenced by increased expenses in miscellaneous goods and services, education, health, and housing and utilities.
Core inflation, disregarding food and energy expenses, decreased from 5% in February to 4.9%. The bureau conducts an annual survey on education, specifically in March.
Kganyago has consistently stressed in every meeting of the Monetary Policy Committee since July 2023 that although the hiking cycle has been put on hold, it does not imply its definitive conclusion.
The committee intends to remain reliant on data when making decisions. He emphasized that interest rates will only be reduced once inflation has significantly and consistently declined to fall within the South African Reserve Bank’s target range of 3% to 6%, with a specific focus on anchoring around the midpoint of the range, 4.5%.
