Economist Sanele Sibiya says it is imperative to look at the long-term historical trend of the inflation rate.
He said the year-on-year trend should be considered to give an indication of medium-term fluctuations, while a short-term perspective is captured through a month-on-month view.
Sibiya said over the long term, inflation rates of 2% were relatively low by the country’s standards, where the 10-year range higher bound was 6.7% observed in September 2022.
He noted that the average inflation rate for 2023 was 5% and 4% in 2024. He said a medium-term outlook showed that on a year-on-year basis, the 2% observed in April was 1.3 percentage points lower than the 3.3% recorded in April 2025.
However, he said on a month-on-month basis, a 0.33 percentage point growth was relatively steep, which led to an upward shift from 1.6% in March to 2% in April.
Overall, he said inflation was still within manageable limits even by the standards of the new inflation target in South Africa, which is now an ideal 3% with a one percentage point deviation.
“Essentially the new range is 2–4% with 3% being the mid-point. The April inflation figures need careful analysis. When contrasted with the long term, inflation is at a manageable level at the lowest band it has ever been historically.
“However, in the short term, a 0.33 percentage point growth is steep and signals mounting inflation pressures. These have been observed on a couple of fronts; the transport sector and the utilities and housing sector,” said Sibiya.
Clarifying further, he said the electricity tariff and fuel price hikes, which include the price of paraffin, had pushed goods inflation to 2.6% compared to 1.1% in services, showing the impact of fuel supply shocks on prices.
Sibiya said this exerted pressure on households as each Lilangeni now has to be stretched further. He noted that electricity, gas and other utilities contributed 1.3% to household pressure, while transport contributed 0.3%.
In the short term, he said cost-of-living pressures were mounting on households and warned that if tensions between the US, Israel and Iran escalate, it could lead to disruptions such as the closure of the Strait of Hormuz and damage to energy infrastructure.
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He said the next two months would remain pressure points, even if the conflict is resolved, as supply chains would take time to stabilise.
In the short term, he said the growth rate might ease slightly as the electricity tariff hike was a once-off event affecting mainly April.
He said food and non-alcoholic beverages saw a decline in April due to good rains and a strong farming season, along with the marula season effect, which shifts consumption to traditional brews not captured in CPI data.
However, if the conflict persists, Sibiya warned that the country could enter the next farming season with elevated input costs.
“About 25% to 35% of the world’s fertiliser and related inputs pass through the Strait of Hormuz, meaning the winter crop will be produced in a high-cost environment.
“We expect this to become another pressure point into August and September. If the conflict lasts into the summer, we expect elevated food inflation well into 2027 as these high production costs will reflect on our plates,” he said.
He also noted a rebound in the accommodation, restaurants and hotels sector, which rose from -1.6% in March to 1.1% in April, largely due to Easter festivities and national events.
He said this momentum was expected to continue through May as the country hosts the MTN Bushfire Festival.
Sibiya advised households to minimise travel, use energy sparingly and consider alternatives such as public transport or walking short distances.
“Travel only if you must. If you live within a three-kilometre radius to work or shopping centres, walk. If you can work from home, use it,” he said.
He also encouraged businesses in the tourism and transport sectors to take advantage of the expected influx of visitors during the Bushfire Festival.
