South Africa’s annual consumer price inflation rate fell to 2.8% in October 2024, a significant drop from 3.8% recorded in September, marking its lowest level in years.
Story Summary:
- South Africa’s consumer inflation dropped to 2.8% in October 2024, the lowest in years, driven by a 19.1% drop in fuel prices and moderate growth in housing, utilities, and food prices.
- Transport costs decreased, while food prices saw mixed trends, with increases in vegetables and fruit but declines in bread and dairy products.
- Upcoming changes to the CPI in 2025 aim to better reflect modern consumption patterns.
Consumer inflation eases to 2.8% in October 2024 – Key findings
According to Statistics South Africa’s latest report, this decline was driven largely by the sharp reduction in fuel prices and modest growth in key expenditure categories.
Key findings from the report include:
- Housing and utilities emerged as primary contributors to inflation, rising 4.8% year-on-year and adding 1.1 percentage points to the overall rate.
- Miscellaneous goods and services, such as personal care products and financial services, increased by 6.8%, contributing 1.0 percentage point to the inflation figure.
- Food and non-alcoholic beverages saw a more moderate rise of 3.6%, adding 0.7 percentage points. Within this category, notable month-on-month price hikes were recorded for vegetables (+2.7%) and fruit (+5.3%), while items such as bread, cereals, and dairy products showed marginal declines.
- Transport, driven by a 19.1% year-on-year decrease in fuel prices, was the only sector with a negative contribution to inflation, subtracting 0.8 percentage points.
The inflation rate for goods fell sharply to 1.4% in October, while services inflation remained steady at 4.4%, highlighting the differing pressures within the economy.
What this means for the average consumer
For the average South African, the easing inflation offers a mix of relief and challenges:
- Lower transport costs: The steep decline in fuel prices is likely to ease commuting and logistical expenses, particularly for middle-income households that rely heavily on private vehicles. However, the overall cost of living remains under pressure in other categories.
- Food price stability: Although food inflation is relatively low compared to previous months, rising costs in key items such as vegetables and fruit continue to strain household budgets, particularly for lower-income groups.
- Financial opportunities: The decrease in inflation could prompt the South African Reserve Bank to reconsider its monetary policy stance, potentially holding or reducing interest rates, which could benefit borrowers.
Upcoming changes to inflation metrics
Looking ahead, a major update to the Consumer Price Index (CPI) is scheduled for January 2025.
The revision will adopt a new classification system, COICOP 18, to reflect shifts in consumer habits and technological advancements.
Notably, this will introduce new categories like Insurance and Financial Services and reclassify goods such as postal services and computers.
