SA inflation eases to 3.5% in November, strengthening case for rate cuts in 2026

CONSUMER PRICE INFLATION

- YOGASHEN PILLAY

ANNUAL consumer price inflation (CPI) eased slightly to 3.5% in November, down from 3.6% in October, reinforcing expectations that inflation is moving closer to the South African Reserve Bank's (Sarb) new 3% target and increasing the likelihood of interest rate cuts next year.

Statistics South Africa (Stats SA) released the latest data on Wednesday, showing that price pressures continue to moderate, supported by lower fuel prices and a stronger rand.

Nicolaas van der Wath, senior economist at the Bureau for Economic Research (BER), said the decline was encouraging.

"The 0.1% month-on-month drop is also good news, and inflation is heading in the right direction towards the 3% target announced by the Sarb. We have seen petrol prices remain relatively lower, which has contributed to the drop in inflation," he said.

However, Van der Wath cautioned that some factors could still push inflation higher.

"Service charges and utility charges contribute to higher inflation, especially with water challenges and electricity outages. Eskom has improved supply, but there are challenges, and this keeps inflation high. Overall, I don't feel CPI will reach 4% next year, and we should see interest rates being cut in 2026."

Independent economist Professor Bonke Dumisa said November's inflation outcome was in line with the new target range.