By Mark Phillips, Head of Portfolio Management and Analytics at PPS Investments

Annual consumer price inflation rose to 3.1% in March 2026 from 3.0% in February, matching market expectations. Although still modest, this increase was mainly due to higher housing, utility, and insurance costs. With fuel prices likely to climb further in April because of geopolitical tensions, inflation may continue rising. On average, prices were up 0.6% in March compared to February. The annual inflation rate for goods decreased slightly to 1.8% in March from 1.9% in February, while services inflation increased to 4.2% from 3.8%.

Recent conflict escalation in Iran has intensified concerns about inflation, especially through its effect on oil prices. South African Reserve Bank Governor Lesetja Kganyago warned that markets might be underestimating how long refinery disruptions could last and how much they could constrain oil supplies. He also stressed that any reduction in fuel levies meant to cushion petrol and diesel price surges should only be temporary.

South Africa's central bank left its ⁠policy rate unchanged at 6.75% in March, saying caution was needed. Market forecasts now point to a 25 basis point rise in interest rates next month, with another hike possible by the end of the year. The oil price shock is expected to prompt officials to lower growth forecasts due to its negative impact on both global economic growth and local spending, which could help ease inflation if overall demand decreases.

Governor Kganyago emphasized that policy actions should focus on ensuring that the current inflation shock is temporary, not lasting. He also remarked that central banks which previously delayed addressing inflation shocks ultimately had to implement more forceful measures.