Mpho Molopyane, Chief Economist at Alexforbes

Key highlights

• Headline consumer price inflation surprised to the downside, remaining steady from the previous month at 3.2% year on year (y/y) in February 2025, compared to the Bloomberg consensus expectation of 3.4%

• Base effects saw food and non-alcoholic beverages (NAB) inflation accelerated to 2.8% y/y in February from 2.3% in January, as had been expected already in the previous month but did not materialise.

• Core inflation, which excludes volatile food, fuel and energy prices, printed 0.1 percentage points (ppt) lower than in the previous month and the consensus estimate – coming in at 3.4% y/y in February.

• The fuel price cuts, albeit minor, contributed to further transport deflation in February. Fuel prices were down -3.6% y/y after falling by 4.5% in January.

• The Bloomberg consensus points to a repo rate hold at tomorrow’s MPC meeting, with only six of the nineteen surveyed analysts expecting a 25-basis point (bps) cut. Our baseline view is that the repo rate will likely be reduced by a further 25bps during the current easing cycle, bringing the total rate cuts to 100bps. However, the timing of the final rate cut is difficult to call. On the inflation front, we expect inflation to remain benign within the SARB’s inflation target but gradually pick up pace in the coming months to average 4% in 2025 (4.3%: 2024).

Read the full report here.

ENDS