South Africa’s core inflation rate slowed sharply to 0.10% MoM in November 2025, down from 0.30% in October. This deceleration aligns with a broader easing trend since the 0.40% peak in August. The 12-month average core inflation rate MoM stands at approximately 0.16%, indicating a moderation in underlying price pressures. This moderation comes amid persistent global uncertainties and domestic economic adjustments.

Drivers this month

• Shelter costs contributed 0.12 percentage points (pp), reflecting steady housing demand.
• Transport services eased, subtracting -0.05 pp due to lower fuel price volatility.
• Food and non-alcoholic beverages remained stable, contributing 0.03 pp.

Policy pulse

The 0.10% reading is below the South African Reserve Bank’s (SARB) target midpoint of 0.15% MoM, signaling easing inflation pressures. This may reduce urgency for further rate hikes, supporting a cautious pause in monetary tightening.

Market lens

Immediate reaction: The ZAR/USD currency pair strengthened by 0.30% within the first hour post-release, while 2-year government bond yields declined by 5 basis points, reflecting market optimism on inflation containment.

Core inflation excludes volatile food and energy prices, providing a clearer view of underlying price trends. South Africa’s core inflation MoM has fluctuated between 0.00% and 0.40% over the past six months, with the November figure marking a return to the lower end of this range. The headline inflation rate YoY currently stands at 5.40%, slightly above the SARB’s 4.50% target midpoint but showing signs of easing.

Monetary policy & financial conditions

The SARB has maintained a cautious stance, with the repo rate steady at 7.25% since September 2025. The moderation in core inflation supports the central bank’s data-dependent approach, balancing inflation control with growth support. Financial conditions remain moderately tight, with credit growth slowing to 4.20% YoY.

Fiscal policy & government budget

South Africa’s fiscal deficit narrowed slightly to 4.80% of GDP in Q3 2025, aided by improved tax collections and controlled spending. However, structural deficits persist, limiting fiscal space to stimulate growth without fueling inflation. The government’s medium-term budget framework emphasizes fiscal consolidation alongside social spending.

Drivers this month

• Shelter inflation remains the largest contributor, consistent with ongoing housing demand.
• Transport and communication costs eased, reflecting lower global oil prices and improved logistics.
• Core goods inflation moderated, influenced by stable exchange rates and subdued wage growth.

Policy pulse

The current core inflation rate sits comfortably within the SARB’s target corridor, reinforcing expectations of a steady monetary policy stance. The data reduces the likelihood of immediate rate hikes but keeps the door open for adjustments if inflationary risks re-emerge.

Market lens

Immediate reaction: South African government bond yields declined modestly, with the 2-year yield dropping 5 basis points. The rand appreciated 0.30% against the US dollar, reflecting market confidence in inflation containment and SARB’s policy credibility.

Looking ahead, South Africa’s core inflation trajectory will depend on several factors, including global commodity prices, domestic demand recovery, and policy responses. The base case scenario projects core inflation MoM averaging 0.12% over the next six months, supported by stable energy prices and moderate wage growth.

Bullish scenario (20% probability)

• Global commodity prices decline sharply, easing input costs.
• Fiscal consolidation succeeds without dampening growth.
• Monetary policy remains accommodative, supporting investment.
• Core inflation falls below 0.08% MoM consistently.

Base scenario (60% probability)

• Core inflation stabilizes around 0.10-0.15% MoM.
• Monetary policy remains data-dependent with no immediate hikes.
• Fiscal policy balances consolidation and social spending.
• External shocks moderate but remain a risk.

Bearish scenario (20% probability)

• Renewed global supply chain disruptions push input costs higher.
• Fiscal slippage leads to inflationary pressures.
• Wage growth accelerates amid labor market tightness.
• Core inflation rises above 0.20% MoM, prompting rate hikes.

South Africa’s November 2025 core inflation rate MoM print of 0.10% signals a welcome easing in underlying price pressures. This moderation supports a cautious but steady monetary policy stance by the SARB amid ongoing fiscal consolidation and external uncertainties. Financial markets responded positively, with the rand strengthening and bond yields declining. However, risks remain from potential external shocks and domestic fiscal slippages. Policymakers must remain vigilant to sustain inflation within target while fostering growth.

Key Markets Likely to React to Core Inflation Rate MoM

The core inflation rate MoM is a critical indicator for South African financial markets, influencing currency, bond, and equity valuations. The following symbols historically track inflation dynamics closely and are expected to react to future prints:

• ZARUSD – The South African rand’s exchange rate against the US dollar is sensitive to inflation and monetary policy shifts.
• JSE – The Johannesburg Stock Exchange reflects investor sentiment on economic conditions and inflation outlook.
• NPN – Naspers Limited, a major South African stock, is influenced by macroeconomic trends including inflation.
• BTCUSD – Bitcoin often reacts to inflation expectations and currency volatility.
• EURZAR – The euro to rand pair is a key cross-currency reflecting inflation and risk sentiment.

FAQ

What is the Core Inflation Rate MoM in South Africa?

The Core Inflation Rate MoM measures monthly changes in consumer prices excluding volatile items like food and energy, providing a clearer view of underlying inflation trends.

How does the latest core inflation reading affect SARB policy?

The 0.10% MoM reading suggests easing inflation pressures, reducing the likelihood of immediate interest rate hikes by the South African Reserve Bank.

What are the risks to South Africa’s inflation outlook?

Risks include global commodity price shocks, fiscal slippage, and wage pressures, which could push inflation higher and prompt monetary tightening.

Takeaway: South Africa’s core inflation rate MoM easing to 0.10% in November 2025 supports a steady monetary policy outlook but requires vigilance amid external and fiscal risks.