Paul Makube, Senior Agricultural Economist, FNB Commercial
South Africa’s headline inflation jumped from 4% in April to 4.5% year-on-year (y/y) in May 2026, reflecting expansions in prices of housing and utilities, transport, and insurance and financial services.
However, monthly pressures dissipated which saw headline nudging 0.7% month-on-month (m/m) in May from 1.1% in April.
Food inflation continued to surprise on the downside after drifting to a 17-month low of 1.6% y/y and unchanged month-on-month (m/m) in May 2026. Consumers are now benefiting from the excellent seasonal production conditions that delivered massive field crops and horticulture harvests.
The data shows prices of 33.3% of the product groups in the food basket decelerating while led by meat, followed by the “oils and fats” and the “sugar, confectionery and desserts” categories.
Meanwhile, the “fruits and nuts” and vegetables product categories remained in deflationary mode for eight consecutive months. Similarly, the cereal product inflation trended in negative territory for four consecutive months to May 2026.
Cereal products inflation declined further, down 1.4% y/y, while edging up only 0.2% m/m. The combination of a bullish domestic and global supply outlook and a stronger rand, both of which continue to exert downward pressure on grain prices underpins this deflationary trend.
Meat inflation decelerated further to an 11-month low of 7.3% y/y, with monthly prices slipping 0.8% m/m as seasonal demand weakened amid constrained consumer disposable incomes. While poultry faced a favourable trading operational environment aided by lower feed costs, beef availability remained constrained. Cattle slaughter data, available up to April 2026, confirmed the downtrend with total volumes for Jan–Apr 2026 falling 18.3% compared to Sep–Dec 2025, and 14.7% y/y relative to Jan–Apr 2025.
Vegetable inflation recorded the sharpest drop, falling 4.7ppts from April to -6.1% y/y in May 2026. On a monthly basis, it decelerated sharply from 4.6% m/m previously to just 0.9% m/m in May.
We observed a similar pattern in fruits and nuts inflation, which declined by 1.9ppts from April to -8.5% y/y in May 2026, accompanied by a further monthly deflation of -3.3% m/m.
Fuel‑driven cost pressures, together with renewed interest rate hikes, will continue to erode disposable incomes and weigh on demand prospects. However, the anticipated moderation in fuel inflation following the announcement of the US‑Iran deal bodes well for the overall inflation outlook toward year‑end.
