South African inflation falls to five-year low in March as fuel, education costs ease

South Africa's annual inflation rate fell for the first time in five months in March to its lowest level since June 2020, due to a drop in fuel costs and softer price rises for tuition.

Headline consumer inflation eased to 2.7 per cent year-on-year from 3.2 per cent in February (ZACPIY=ECI) the 2.9 per cent expected by economists polled by Reuters, and outside the South African Reserve Bank's (SARB) 3 per cent to 6 per cent target range.

A breakdown by Statistics South Africa showed the fuel index was down 8.8 per cent last month.

Education fees, which are surveyed once a year in March, increased 4.5 per cent, slower than the previous year's 6.4 per cent rise.

Some analysts thought the latest inflation numbers gave the central bank scope to cut interest rates at its next monetary policy meeting in May.

"There is ample room for the (central bank) to cut rates further to support the economy, to soften the hit from the global trade war," Elize Kruger, a South Africa-based independent economist, said.

The SARB left its key lending rate unchanged at its last meeting in March after three consecutive cuts, citing risks from US President Donald Trump's tariffs and the country's disputed national budget.

It stuck to that cautious tone in a biannual review of its monetary policy last week.

Elna Moolman at Standard Bank saw signs of weakness in the residential rental market in Wednesday's release, which she said was helping keep inflationary pressures benign.

However, the SARB's concerns around global tariffs and a weaker local currency meant further rate cuts may not necessarily happen soon, she said.

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