Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Higher inflation expected by end of 2025

Higher inflation expected by end of 2025

Domestic inflation is expected to gradually rise and reach 4.5% year-on-year (y/y) by the end of 2025. 

The upside risks primarily pushing inflation higher include higher oil prices, potential geopolitical tensions as well as higher food, rental and utility prices in the short-term. 

This outlook is according to the latest First National Bank Consumer Price Review that noted headline inflation increased from 3.2% y/y in January (revised downwards from 3.4% previously) to 3.6% in February 2025, well below the 5% in February last year. 

“Domestic inflation remains largely driven by services, with services inflation (4.0%) outpacing goods’ inflation (3.6%). The sticky inflation dynamic is further reflected in core inflation, which edged down by just 0.1% to 3.5% y/y from 3.6% in January 2025. Food and non-alcoholic beverages (16.5% of the basket) remains the main contributor to inflation, adding 1.2ppts to the headline print. However, food prices increased marginally to 5.9% y/y in February – up from 5.8% in February 2024,” the review states.  

Meanwhile, the food sub-category, which makes up 14.8% of the basket, experienced a notable rise in bread and cereals inflation, increasing to 6.1% from -0.4% in February last year. 

“As bread is a staple with inelastic demand, price hikes have a greater impact on consumers, especially low-income households, reinforcing the psychological effect of rising costs,” the review notes. 

Similarly, inflation in the housing, water, electricity, gas and other fuels’ category (28.4% of the basket) recorded an increase of 3.6% y/y in February, compared to the 3.5% observed in the same month last year, contributing an overall 0 points to headline inflation last month. 

The transport category recorded an inflation rate of 1.3% y/y, down from 6.5% in February 2024, driven by the purchase of vehicles (down from 10.5% to 1.7%) and operation of personal transport equipment (down from 6.6% to 1.1%) sub-categories.

Moreover, inflation eased to 0.4% month-on-month (m/m) in February, down from a seasonal peak of 1.1% in January, slightly above the 2024 monthly average of 0.3%. 

FNB pointed out this pattern reinforces the view that inflation risks are still tilted to the upside, particularly in the short-term. 

“While the month-on-month inflation in the housing and utilities’ sector remains subdued largely due to base effects, it continues to be the largest driver of monthly inflation,” FNB added. 

THE FNB CPI Review continued that food inflation increased by 0.9% m/m, pointing to persistent short-term upward pressure. 

Similarly, inflation in the transport sector surged to 1.4% in February, up from 0.4% in January and -0.2% in February 2024, further highlighting short-term inflationary pressures to the upside. 

Going forward, FNB expects upside risks to inflation to persist, especially from food and imported goods’ prices.

This could push up goods’ inflation, which is more sensitive to supply-chain disruptions and raw material fluctuations, particularly amid geopolitical unrest. 

“Therefore, given the risk of heighted geopolitical tensions, upside risk to goods’ inflation remains imminent. Food prices are expected to remain elevated until improved harvest yields in May. Housing and utility costs face upward pressures from anticipated tariff hikes and demand-driven rental inflation. Global oil supply is expected to increase relative to demand, limiting transport inflation risks. Therefore, we expect inflation to rise in the short-term, reaching 3.9 y/y in March 2025, with an average of 3.8% for 2025, slightly lower than the 4.2% average for 2024,” FNB forecasts.