Inflation likely to remain around 5% in quarter three, predict some economists

JOHANNESBURG - Some economists predict inflation will remain sticky around 5% in quarter three as consumers continue to hang onto hopes for some reprieve.

The latest prediction followed the release of Statistics South Africa (Stats SA)’s inflation print on Wednesday.

Year-on-year inflation moderated to its lowest level in 2024, dropping marginally from 5.2% to 5.1% in June.

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Economists at Nedbank believe inflation will decelerate to the South African Reserve Bank (SARB)’s midpoint target during quarter 4, ending the year at 4.5%.

It’s then expected to stabilise around the midpoint throughout 2025.

The bank said the downward pressure would likely come from muted global price pressures and subdued domestic demand, although volatile international oil prices and other price hikes would partly counter those factors.

It said the rand remained a worry. The local currency is expected to remain volatile until United States (US) disinflation gains momentum and the US Fed starts its rate-cutting cycle.

Any relapse in global growth or signs of a hard landing in the US, as well as South Africa’s complex challenges, also continue to pose upside risks to the inflation outlook.