Commerzbank warns rising oil prices and a strong El Niño could reverse recent inflation declines, pressuring food costs.
South Africa’s August inflation fell to 4.3% from 4.7% in July, driven by lower gasoline and food prices. Core CPI also eased to 4.2%, surprising analysts who expected a smaller decline.
The relief may be short-lived as global oil prices remain elevated, likely pushing fuel costs higher in September. A 90% chance of a strong El Niño this year poses additional risks, with historical data showing maize harvests could drop 20-50%, lifting grain prices by up to 15%.
Meteorologists estimate a 69% probability this El Niño could be the strongest since 1950, mirroring conditions seen in 2015/16 and 2023/24. The central bank’s inflation target of 3-6% faces prolonged breaches if food and fuel pressures persist.