April consumer inflation edges higher to 2.8% year-on-year
Consumer inflation edged higher to April to 2.8% year-on-year from 2.7% in March, driven mainly by the housing and utilities as well as the alcoholic beverages and tobacco categories, Statistics South Africa said on Wednesday.
Consumer
But, on a monthly basis, consumer inflation slowed to 0.3% in April from 0.4% in March.
The main contributors to the uptick in the annual number for April were alcoholic beverages and tobacco (4.7%), housing and utilities (4.4%), food and non-alcoholic beverages (4%) and restaurants and accommodation services (3%).
During the same period, year-on-year inflation for goods eased to 1.7% from 2% previously, while that for services was at 3.8%, up from 3.5% in March, Stats SA said.
Stats SA published Wednesday data ahead of Finance Minister Enoch Godongwana tabling a third version of the 2025
It also comes amid discussions about lowering the inflation target after Reserve Bank governor Lesetja Kganyago last year signalled a desire to set a lower midpoint for the inflation target in line with global peers. The central bank has a mandate from the treasury to keep inflation within a 3-6% target band, with a midpoint of 4.5%.
April's slight inflation uptick suggests that the Reserve Bank will
'Lower inflation targets tend to reduce inflation expectations, which can moderate wage and price increases, helping to stabilise the economy,' said Bianca Botes, an analyst at Citadel Global.
'Research into South Africa's experience with moving the inflation midpoint to 4.5% shows that such shifts can be achieved without sacrificing gross domestic product growth or increasing unemployment, provided the central bank maintains clear communication and credibility. This suggests that a further reduction in the inflation target could be managed with minimal economic disruption.
'While this move could lead to more cautious interest rate policies and strengthen the rand, it requires balancing inflation control with growth and investment needs. The ultimate impact will depend on the clarity of communication, policy credibility, and the broader economic environment,' Botes added.
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