SA’s Inflation Drops to 2.7% in March, Driven by Fuel and Education Costs

The latest inflation report reflects a complex interplay of easing pressures in fuel and education costs, counterbalanced by persistent challenges in food and beverage prices.

In a welcome shift for South African consumers, Statistics South Africa (Stats SA) announced on Wednesday that headline consumer inflation declined to 2.7% in March 2025, from 3.2% in February. This marks the first decrease in inflation in five months, largely attributed to falling fuel prices and a softer rise in education-related expenses.

Fuel Prices Bring Relief

A key contributor to the decline was the continued easing of fuel prices. Stats SA reported that the fuel index dropped by 0.4% between February and March, bringing the annual fuel inflation rate down sharply from -3.6% to -8.8%. Petrol and diesel prices showed significant decreases compared to the previous year.

• The inland price for a litre of 95-octane petrol in March was R22.34, down from R24.45 in March 2024.

• Diesel prices also saw a decline, averaging R22.80 in March versus R24.85 a year earlier.

The softening of fuel prices has broad implications, affecting not only transportation costs but also the price of goods and services across the economy.

Education Inflation Cools Amid Annual Survey

March is the designated month for surveying education fees in South Africa. According to Stats SA, the education category posted a 4.5% increase in its price index this year—lower than the 6.4% rise recorded in 2024.

• School fees rose by 5.0% in 2025, a moderation from the 6.6% increase the previous year.

• Tertiary education saw fees climb by 3.7%, well below the 5.9% rise recorded in 2024.

This deceleration in tuition inflation contributed to the overall easing in consumer price growth.

Food and Beverage Prices Show Mixed Trends

While food inflation remained nearly flat, ticking down slightly from 2.8% in February to 2.7% in March, individual categories showed divergent trends.

Price Increases:

• Cereal Products: Inflation rose to 4.3% in March from 3.9% in February. Maize meal, a staple in many households, remains a major driver, with its annual rate accelerating to 13.1% from 10.6%.

• Meat, Fish, Vegetables, Fruits, and Nuts: These categories posted higher annual rates compared to February.

Price Relief:

• Oils and Fats

• Hot Beverages

• Milk, Dairy, and Eggs

• Cold Beverages

• Sugar, Confectionery, and Desserts

Stats SA noted some good news regarding maize meal, despite its high annual inflation. The monthly increases are tapering off:

• January: +4.8%

• February: +2.4%

• March: +1.4%

Beverage Pain Points:

Despite a slight easing, hot beverage inflation remains problematic:

• Category inflation is still at a high 14.4%.

• Instant coffee prices surged 18.8% over the past year.

• Black tea costs are 12.8% higher than in March 2024.

Alcohol Prices Edge Higher

Alcoholic beverages contributed additional pressure to March’s inflation figures. The monthly rise between February and March was 2.1%, pushing the annual rate to 4.7% from 4.1% the previous month.

Breakdown by category:

• Wine: +5.3%

• Beer: +4.4%

• Spirits and Liqueurs: +4.3%

This sector has seen steady upward movement in prices, contributing to household expenditure pressures.

Outlook

The latest inflation report reflects a complex interplay of easing pressures in fuel and education costs, counterbalanced by persistent challenges in food and beverage prices. While headline inflation has dropped below the South African Reserve Bank’s midpoint target, risks remain—particularly in volatile food categories and regulated sectors like education and fuel.

Should global oil prices remain stable and domestic food production continue improving, further moderation in inflation could be on the horizon. However, policymakers and consumers alike will be watching closely for any new pressures in the coming months.