Fuel price shock pushes South Africa's inflation to 22-month high of 4.5%

SOUTH Africa's annual consumer inflation accelerated sharply to 4.5% in May, its highest level in 22 months, as surging fuel prices filtered through the economy and pushed headline inflation beyond the South African Reserve Bank’s (Sarb) preferred target range.

- YOGASHEN PILLAY

Data released by Statistics South Africa (StatsSA) on Wednesday showed that consumer price inflation (CPI) climbed from 4.0% in April to 4.5% in May, marking the highest annual inflation rate since July 2024, when inflation stood at 4.6%.

The latest figures have heightened concerns that rising fuel costs linked to global oil market disruptions could place renewed pressure on households and complicate the monetary policy outlook.

Nedbank economists said they expect headline inflation to rise further to a peak of around 4.9% in June before gradually moderating to end the year around 3%.

Though they said recent geopolitical developments have been favourable and food inflation should also continue to ease, administered prices will remain a source of inflation.

“The upward pressure in June will likely stem primarily from the petrol price hike at the start of the month, when global oil prices were still relatively high, as the Strait of Hormuz remained closed and National Treasury began phasing in the remainder of the fuel levy,” they said.