By Monique Vanek.
South Africa’s inflation rate flatlined on the eve of a widely expected interest-rate pause.
The consumer-price index rose 3.2% in February from a year earlier, the same as the previous month, Pretoria-based Statistics South Africa said in a statement on its website on Wednesday. The median of 17 estimates in a Bloomberg survey of economists was 3.4%.
The rand traded 0.5% weaker at R18.24 per dollar as at 10:41 a.m. in Johannesburg. Yields on rand-denominated bonds due in 2035 fell to 10.57%.
The reading may persuade the central bank’s monetary policy committee to leave its key interest rate at 7.5% following the conclusion of its meeting on Thursday, after three previous quarter-point cuts.
The MPC will probably adopt “a wait-and-see approach, given the global uncertainty at the moment,” EY Africa Chief Economist Angelika Goliger said ahead of the release.
Since the committee’s last rate decision in January, there has been a marked escalation in US President Donald Trump’s rhetoric and tariff measures against neighbours, allies and competitors alike. What were unrealised threats a few weeks ago have now emerged as full-blown hindrances to commerce.
The MPC will also be concerned by average inflation expectations in two years’ time — a measure it uses to inform its decision-making — edging up to 4.7% in the first quarter from 4.6% previously. The panel prefers to anchor expectations at the midpoint of its 3% to 6% target range.
“The South African Reserve Bank could still implement a 25-basis point cut in the second half of 2025, aiming to support consumer demand amid a more benign inflation outlook,” Goliger said.
Forward-rate agreements, used to speculate on borrowing costs, are pricing in a 28% chance of a 25-basis-point reduction at Thursday’s MPC meeting, and a 100% probability of a cut of that magnitude by year-end.
The main drivers of inflation were housing and utilities, food and non-alcoholic beverages, restaurants and accommodation services.
Core inflation, which excludes the cost of food, non-alcoholic drinks, fuel and electricity, slowed to 3.4% from 3.5% in January as health-insurance costs filtered into the data. The statistics agency surveys medical-insurance costs biannually in February and April.
The statistics agency in January revised the data used to calculate household expenditure and added insurance and financial services as a new category. Insurance prices rose 8.1% and financial services 5.2%.