Inflation target lowered to 3%

In a widely expected move, the finance minister announced the new target, which he said would benefit households, businesses and the government. Investors will no doubt be pleased, too.

- By Neesa Moodley

Finance Minister Enoch Godongwana announed in his Medium-Term Budget Policy Statement (MTBPS) 2025 on Wednesday, 12 November, that the inflation target will be changed for "the first time in a quarter of a century".

"The new target will anchor inflation at permanently lower levels, which will reduce the cost of living and borrowing for households, businesses and the government, supporting higher long-term economic growth and job creation," Godongwana said in the foreword.

In June, Reserve Bank governor Lesetja Kganyago reiterated his argument for a lower inflation target, saying that the current rate undermined the value of the rand and contributed to persistent price increases.

The South African Reserve Bank (SARB), along with the Treasury, carried out a technical review of the inflation targeting framework and submitted recommendations to Kganyago and Godongwana.

"Although an inflation rate of 4.5% may seem moderate, it still causes prices to double every 16 years," Kganyago noted in the SARB's annual report.