South Africans could soon see a slight rise in the cost of living as economists predict a small increase in inflation to around 3% for June 2025. While this change is modest and still within the South African Reserve Bank’s (SARB) target of 3% to 6%, it’s enough to draw attention from consumers and businesses alike.
This potential shift reflects ongoing pressure on prices across the economy, especially with food and service costs climbing steadily.
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What’s Causing the Increase in Inflation?
1. Food Prices Keep Rising
One of the biggest reasons for the increase in inflation is the continued rise in food prices. According to Statistics South Africa, food and non-alcoholic beverages increased by 1.1% in May 2025, following a 1.3% increase in April.
These back-to-back price hikes are pushing up the overall cost of living. Since food is one of the biggest expenses for many households, especially low-income families, it plays a major role in the overall inflation rate.
2. Core Inflation Is Also Climbing
Economists also pay attention to something called core inflation, which removes the most volatile items like food and fuel to give a clearer picture of long-term price trends. In April, South Africa’s core inflation rose to 3%, which was higher than the overall inflation rate of 2.8%.
This means that inflation is spreading beyond just groceries and fuel. Prices for things like healthcare, transport, and housing are also rising. The OECD Economic Outlook has noted these pressures, saying they could continue to drive inflation up in the coming months.
3. Weak Growth and Lower Interest Rates
South Africa’s economy has been growing slowly. The first quarter of 2025 saw growth of just 0.1%. In response, the South African Reserve Bank has cut interest rates to try to boost spending and investment, with the current repo rate sitting at 7.25%.
However, lowering interest rates can also contribute to an increase in inflation. When borrowing becomes cheaper, people and businesses spend more. If the supply of goods doesn’t grow at the same pace, prices may go up.
As Reuters reports, the SARB is carefully watching these developments, trying to balance support for the economy with the need to keep inflation under control.
How the Increase in Inflation Affects You
Expect to Pay More for Essentials
If inflation rises to 3%, you might notice your monthly expenses going up. Food, transport, electricity, and household goods could all become slightly more expensive. This can make it harder to stick to your budget or save money, especially for families already feeling the pinch.
Interest Rates Could Change Again
If inflation continues to climb, the SARB might stop lowering interest rates or even raise them again. That could affect the cost of car loans, mortgages, and other credit. According to the South African Reserve Bank, keeping inflation stable is a top priority, and any shift in inflation data could lead to a policy change.
Economic Growth May Slow
A steady increase in inflation can also slow the economy. If people cut back on spending due to higher prices, businesses could lose income. This makes it harder for the economy to grow, especially in sectors like retail, travel, and manufacturing.
Even though long-term inflation expectations are still stable, Reuters warns that short-term increases could influence how the Reserve Bank reacts in the months ahead.
Why the Increase in Inflation Matters
Inflation affects everyone. Whether you’re buying groceries, paying for transport, or saving for your child’s education, price increases have a real impact. A small increase in inflation might seem harmless, but it can add up over time.
That’s why the SARB works to keep inflation between 3% and 6%, a level that supports growth while avoiding runaway prices. You can read more about this in the SARB’s monetary policy framework.
What’s Next?
The official June inflation data will be released soon. If the prediction is accurate, the figure will show a slight increase in inflation to 3%. That’s still within the target range, but it’s a sign that rising prices may continue if action isn’t taken.
Households should watch for changes in food and fuel prices, while businesses may need to plan for tighter consumer spending. Policymakers will be watching the data closely and considering what to do next.
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