South Africa’s annual inflation rate eased to 3.5% in January, supported by stable food prices and lower fuel costs, official data showed on Wednesday.
Statistics South Africa (Stats SA) reported that consumer price inflation slowed from 3.6% in December 2025 to 3.5% in January 2026. On a month-on-month basis, the Consumer Price Index (CPI) rose by 0.2%.
The agency said housing and utilities (4.8%), food and alcoholic beverages (4.4%), and insurance and financial services (6.8%) were the main drivers of annual inflation, contributing 1.2, 0.8, and 0.7 percentage points, respectively.
Goods inflation softened further to 2.7% in January, down from 3.0% in December, while services inflation remained unchanged at 4.2%.
Government spokesperson Nomonde Mnukwa attributed the easing to contained price pressures at the start of the year.
“The easing in inflation reflects a combination of stable food prices and lower fuel costs, which contribute to a generally contained price environment at the start of the year,” Mnukwa said.
She added that food inflation trends offered particular relief to households.
“Food price inflation remained steady overall, with several staple items recording slower increases or price declines,” Mnukwa noted.
According to the statistical release, cereals, rice, dairy, and eggs showed signs of moderation, easing pressure on consumers grappling with high living costs.
Fuel prices also declined on both a monthly and annual basis. “Supporting the broader moderation in inflation, the decline of fuel prices also contributed positively to the easing of transport-related costs,” Mnukwa added.
Retail sales lose momentum.
Separate data released by Stats SA showed that retail trade sales rose by 2.6% year-on-year in December 2025, down from 3.6% in November, marking the slowest pace of growth in four months.
The largest positive contributors were general dealers, which expanded by 3.9%; all other retailers, at 8.3%; and retailers in household furniture, appliances, and equipment, at 11.5%. These segments contributed 1.6, 0.8, and 0.5 percentage points, respectively, to overall retail growth.
However, the broader trend pointed to softening consumer demand at the end of the year.
The statistics agency said the slowdown was most evident in sales of pharmaceuticals and medical goods, cosmetics and toiletries, as well as textiles, clothing, footwear, and leather goods. Spending on food, beverages, and tobacco also declined during the period under review.
The combined data paints a mixed picture for Africa’s most industrialised economy. While inflation remains within a relatively contained range, easing price pressures may reflect subdued demand conditions rather than robust economic momentum.
The moderation in retail activity suggests that households remain cautious, even as inflation stabilises. For policymakers, the cooling inflation print could offer some breathing room, but the slowdown in consumption may temper optimism about the strength of domestic recovery.
With inflation at 3.5%, South Africa remains within its target band, but analysts will be watching closely whether easing fuel and food costs can sustain downward pressure on prices without further dampening consumer spending in the months ahead.
