By Koketso Mano & Ame Muller
Headline inflation rose to 4.0% year-on-year (y/y) in April from 3.1% in March. The print is higher than our forecast of 3.8% but in line with market consensus. Monthly pressure was 1.1%, mainly due to pressures from fuel and core inflation, with a further marginal pressure from food.
Core inflation lifted to 3.6%, with monthly pressure of 0.5%. Services inflation recorded 0.6% month-on-month (m/m), and 4.6% y/y, mainly driven by medical insurance, communication and public transport. Core goods inflation was 0.3% m/m and 1.4% y/y.
Average fuel prices increased by 18.2% m/m and were 11.4% higher than in April 2025.
Food and NAB inflation slowed to 2.9% y/y with average prices rising by 0.7% m/m mainly driven by vegetables, meat as well as dairy and eggs.
Outlook
Based on today's data, our updated model suggests that headline inflation will rise to 4.6% y/y in May. The increase will again be driven by higher fuel prices and further pass-through to public transport costs. While an oversupply of some food products should keep near-term food inflation contained, pressure on retailers is building as margin compression, previously a buffer against global supply shocks, continues.
Beyond the next print, broader energy inflation should remain a key upside risk. Although temporary relief measures have been extended to limit fuel price increases, fuel costs remain elevated. The general fuel levy relief is expected to be phased out by July, potentially exposing the consumer to further fuel price pressures while the war impact lingers. In addition, higher electricity costs will also lift consumer inflation as the municipality survey draws closer. Risks over the forecast horizon remain to the upside, reflecting higher oil prices given the potentially extensive impact of the prolonged war and continued uncertainty around the recovery of the physical oil market.
Against this backdrop, attention now turns to the upcoming monetary policy decision. Consistent with recent communication, the South African Reserve Bank is willing to look through first-round fuel effects but remains highly attentive to signs of second-round pressures. With inflation risks becoming more persistent and expectations not yet fully anchored at target, the policy stance is expected to retain a cautious, slightly hawkish bias, with limited tolerance for any further upside surprises. We predict a 25-basis points hike at the next meeting.
The May inflation print is scheduled for release on 17 June. No major periodic surveys are conducted in May.
