Inflation and your money
Inflation is the rate at which prices rise, and it quietly reduces what your money can buy every year.
How inflation is measured
Statistics South Africa measures inflation each month with the consumer price index (CPI), which tracks the price of a typical basket of goods and services, from food and fuel to rent, electricity and school fees. Headline inflation is the change in CPI over the past year. Your own inflation can be higher or lower, depending on what you spend your money on.
The Reserve Bank’s target
The South African Reserve Bank aims to keep inflation low and stable. In November 2025 government set a new inflation target of 3%, with a tolerance band of one percentage point either side, replacing the 3% to 6% range used since 2000. When inflation threatens to stay above target, the Reserve Bank can raise the repo rate, which makes borrowing more expensive.
What it does to your money
If prices rise by 5% a year, R 100 000 today buys only what about R 78 400 buys in five years, and about R 61 400 in ten. Cash in an account earning less than inflation loses buying power even though the balance goes up. That is why the real return, your interest rate minus inflation, is what matters.
| Years | At 3% inflation | At 5% inflation | At 7% inflation |
|---|---|---|---|
| 5 | R 86 300 | R 78 400 | R 71 300 |
| 10 | R 74 400 | R 61 400 | R 50 800 |
| 20 | R 55 400 | R 37 700 | R 25 800 |
The table shows what R 100 000 would buy in today’s money.
Protecting yourself
- Keep your emergency fund in an account that pays a competitive rate, such as a money market or notice account.
- For long-term goals, investments with growth assets such as shares have historically beaten inflation over long periods, though they go up and down along the way.
- Use a tax-free savings account so returns are not reduced by tax as well.
- Increase debit orders for savings when your salary goes up, so savings keep pace.
- Review your budget each year: fixed costs like insurance and school fees tend to rise faster than you notice.
Frequently asked questions
What is the difference between CPI and my salary increase?
If your increase is lower than inflation, your real income has fallen even though your pay went up. The salary increase calculator shows the effect.
Are inflation-linked bonds an option?
Yes. South African government inflation-linked bonds, and RSA Retail Savings Bonds with an inflation-linked option, pay a return above CPI and are available to individuals.
Does inflation help people with debt?
Somewhat, because the debt is fixed in rands while incomes tend to rise. But higher inflation usually brings higher interest rates, which raises repayments on variable-rate loans.
Related calculators
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Open calculator →CPI from Statistics South Africa; inflation target from National Treasury’s November 2025 Medium-Term Budget Policy Statement and the South African Reserve Bank. Table figures are 100 000 ÷ (1 + inflation)^years, rounded to the nearest R 100. Checked 16 October 2026.