By Rorisang Modiba
- Investec chief economist Annabel Bishop says petrol makes up only 3.8% of the consumer inflation basket in South Africa.
- Meat prices are rising fast because of foot-and-mouth disease, with meat inflation reaching 12.6% in December 2025.
South African motorists got a break this week when petrol prices were cut by 65 cents a litre. But Investec chief economist Annabel Bishop says the cut will do little to bring down the cost of living.
Bishop says petrol makes up only about 3.8% of the consumer inflation basket. About half the pump price is made up of taxes and levies, which do not change when oil prices or the rand improve.
The price cut came from two things. Lower international oil prices contributed 37 cents, while a stronger rand added 28 cents. The rand strengthened to R15.76 to the dollar at the end of January, from R16.51 at the start of the year.
South Africa’s inflation rate was 3.6% in December 2025. Bishop expects it to stay around that level in January before easing to about 3.0% by March 2026, MyBroadband reported.
A stronger rand does help in other ways. Bishop says for every 50-cent improvement against the dollar, inflation drops by about 0.1%. If the rand averages between R15.50 and R16.50 this year, inflation could sit between 2.9% and 3.1%.
But there are risks. Meat prices are climbing fast because of foot-and-mouth disease. Meat inflation hit 12.6% in December and could stay high until at least April 2026.
The national budget, to be tabled later this month, could also include higher fuel levies. Fuel taxes went up by 15 cents a litre in the 2025 budget after being frozen since 2022. Another hike in 2026 could cancel out expected petrol price cuts in March.
Pictured above: A petrol station in South Africa.
Image source: File
