The South African consumer price index (CPI) print in March surprised many with its slow 2.7% year-on-year inflation rate, beating the Bloomberg consensus forecast of 3.0%. This result, however, does not necessarily seal the case for the South African Reserve Bank (SARB) to cut interest rates at its next meeting in May. The cooling trajectory of the CPI print can be attributed to several factors, including lower fuel prices and a moderation in education fees. The latter, a key driver of inflation in the country, has seen a significant decline in recent years, with students’ annual fee increases moderated. South African students have been protesting for years under the slogan “Fees Must Fall”, and while the fees have not decreased, the annual increase has slowed down. In fact, the annual increase in education fees has been as low as 4.5% in recent years, compared to the 6.4% rise in 2024. Education costs have been a significant contributor to the CPI print, and their moderation has helped to keep inflation in check. According to Statistics South Africa (Stats SA), the price index for education increased by 4.5% in March, lower than the 6.4% rise in 2024. School fees increased by 5.0%, while tertiary education institutions charged 3.7% more in 2025, compared to the 5.9% rise recorded the year before. In addition to education costs, food inflation picked up slightly to 2.2% in March from 1.9% the previous month. The price of maize meal, a staple food for many South Africans, remains a concern, with prices rising on an annual basis to 13.1% from an already elevated 10.6% in February. The impact of these rising food prices on lower-income households is a significant concern, as highlighted by Wandile Sihlobo, the chief economist at the Agricultural Business Chamber. Sihlobo suspects that the mild quickening of food price inflation will prevail for much of the year’s second quarter, as the increases in farm level prices for key products such as grains continue to pass through to the retail level. For coffee and tea lovers, however, the good news is that the price of their favourite beverage remains relatively stable, with the price of coffee and tea increasing by only 0.5% in March. Despite the cooling CPI print, the South African Reserve Bank (SARB) may still take a cautious approach to cutting interest rates in May. This is due to the ongoing global uncertainty, particularly with regards to the Trump administration’s chaotic tariff policies and the impact of the “America First” agenda on the global economy. However, if the CPI remains around or slowly accelerates from the benign levels seen in March, the SARB may consider cutting interest rates in the future if the global trade tensions cool off.
- Lower fuel prices and a moderation in education fees were the key drivers of the 2.7% year-on-year inflation rate in March.
- Food inflation picked up slightly to 2.2% in March from 1.9% the previous month.
- The price of maize meal remains a concern, with prices rising on an annual basis to 13.1% from an already elevated 10.6% in February.
Table 1: CPI Print in March
| Category | Year-on-Year Inflation Rate |
| — | — |
| Education | 4.5% |
| School Fees | 5.0% |
| Tertiary Education | 3.7% |
| Fuel | -1.2% |
| Food | 2.2% |
| Maize Meal | 13.1% |
“I suspect that the current mild quickening of food price inflation will prevail for much of the year’s second quarter as the increases in the farm level of some of the key products, such as grains, continue to pass through to the retail level.”
– Wandile Sihlobo, Chief Economist at the Agricultural Business Chamber
The CPI print in March may not be a clear-cut indication of the Reserve Bank’s decision on interest rates in May. However, it does suggest that the economy is slowly showing signs of improvement, and the Reserve Bank may be more willing to cut interest rates if the global trade tensions cool off. In the coming months, it will be interesting to see how the CPI print evolves, and whether the Reserve Bank will take a more aggressive approach to cutting interest rates.
The Impact of Education Costs on CPI
The education sector has been a significant contributor to the CPI print, and their moderation has helped to keep inflation in check. According to Stats SA, the price index for education increased by 4.5% in March, lower than the 6.4% rise in 2024. The moderation in education costs has had a positive impact on the CPI print, but it does not necessarily mean that the Reserve Bank will cut interest rates in May.
Food Inflation: A Concern
Food inflation picked up slightly to 2.2% in March from 1.9% the previous month. The mild quickening of food price inflation will prevail for much of the year’s second quarter, as the increases in farm level prices for key products such as grains continue to pass through to the retail level.
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