Food costs push South Africa inflation to 3% in June

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Emilio Ghigini

25.07.2025

Food costs push South Africa inflation to 3% in June — SARB faces dilemma as inflation climbs, rates under review

South Africa’s consumer price index (CPI) accelerated to 3% year-on-year in June, up from 2.8% in May, after two months of stability. This puts CPI at the lower bound of the South African Reserve Bank’s (SARB) target range of 3–6%, highlighting ongoing pressure from rising food prices, particularly meat.

Food inflation rose to 4.7% in June from 4.4% in May.

"Meat, especially beef, remains the primary driver of food inflation. Beef prices surged for the third consecutive month, with strong annual and monthly increases recorded for stewing beef, minced meat, and steaks," reported Stats SA.

Stewing beef prices alone jumped 21.2% year-on-year — the fastest rate since the current CPI series began in January 2017.

Key drivers include a recent ban on Brazilian poultry imports due to avian flu and a foot-and-mouth disease outbreak in South Africa — though both issues have now subsided, which may ease pressure.

Other food categories also saw sharp increases: fruit and nuts rose by 13.2%, and vegetables by 13.6% year-on-year for the second month in a row. Beets, lettuce, and carrots rose steeply, while peanuts, grains, and some dairy products fell slightly in price.

“This recent spike in vegetable prices is likely temporary and weather-related. We expect supply recovery in the second half of the year,” said Wandile Sihlobo, Chief Economist of the Agricultural Business Chamber, to Daily Maverick.

Fuel prices curb inflation

Fuel prices, meanwhile, helped limit broader inflation: June fuel prices were 11.2% lower than a year earlier, although the decline was smaller than May’s 14.9% drop.

According to Stats SA, the transport category subtracted 0.5 percentage points from overall CPI in June, partially offsetting food-driven price increases.

The acceleration in inflation makes an interest rate cut at SARB’s July 31 Monetary Policy Committee (MPC) meeting less likely. However, since inflation remains at the lower end of the target range, economists believe there is still room for rate cuts.

“This low inflation is a significant support to consumers, especially as wage increases are often above current inflation. It may also justify further SARB rate cuts,” said Dr. Elna Moolman, Head of Macroeconomic Research at Standard Bank.

Investec Bank forecasts CPI to rise gradually in the second half of the year due to base effects, potentially reaching 4% by year-end, though still "moderate". The bank expects at least one more rate cut this year, with another possible in 2026.

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