By Ame Muller
Headline inflation rose to 4.5% year-on-year (y/y) in September from 4.4% in August, coming in below our and market expectations of 4.7%. Monthly pressure was 0.4% month-on-month (m/m), mainly driven by fuel and core inflation.
Core inflation eased marginally to 4.0% y/y, with monthly pressure of 0.2% m/m, led by housing and public transport. Services inflation recorded 0.3% m/m and 4.9% y/y, while core goods inflation was 1.6% y/y with no monthly pressure.
Average fuel prices rose by 6.2% m/m and were 27.9% higher than in September 2025.
Food and NAB inflation ticked up to 1.2% y/y, from 1.1% previously, while monthly pressure was -0.1%, reflecting deflation in meat and vegetable prices.
Outlook
Considering the latest print, we expect headline inflation to increase to 0.8% m/m and 5.3% y/y in October. The anticipated acceleration will be driven primarily by the sharp increase in fuel prices implemented at the beginning of the month, which is expected to filter directly through to the fuel component, as well as indirectly through to higher transport-related costs.
The modest acceleration in headline inflation during September supports the South African Reserve Bank's assessment that progress in reducing inflationary pressures has become more challenging amid renewed fuel and energy price pressures. While broader inflation dynamics remain relatively contained, the Monetary Policy Committee has become increasingly concerned about the risk of second-round effects should higher fuel costs become embedded in inflation expectations and domestic price-setting behaviour, a key consideration underpinning the September rate hike.
Looking ahead, the substantial fuel price increases implemented in October are likely to exert further upward pressure on headline inflation and keep near-term inflation risks tilted to the upside, even as demand conditions remain subdued and core inflation continues to show signs of restraint.
The October inflation print is scheduled for release on 18 November. Major periodical surveys conducted in October include funeral expenses and policies (1.48% weight in CPI).
