Annual consumer price inflation (CPI) increased at a faster rate of 4.5% in January, compared to 4% in December, according to data released on Wednesday.
The rate was buoyed by increases in the price of fuel, food and utilities. Housing and utilities notably contributed 1.2 percentage points, and transport costs 0.9%, according to Statistics South Africa (Stats SA).
Provincial annual CPI increases ranged from 4 per cent in the Eastern Cape and Free State to 5.1 per cent in the Western Cape.
Economists noted that despite inflation picking up pace in January, the increase was still at the halfway mark of the target range set by the South African Reserve Bank (SARB).
PwC pointed out that January's inflation figure was also below the average of 4.8 per cent the central bank had forecast for the first quarter of 2020.
"Regular below-forecast inflation readings has enabled the central bank to ease monetary policy over the past six months at a time where economic growth and household finances are under significant pressure," it said.
The bank cut interest rates by 25 basis points in January and said a sunnier inflation outlook had created space for further monetary policy easing, raising the spectre of a further interest cut later in the year.
But, PwC said, South Africa's sovereign risk picture could yet prevent further easing.
SARB head of economic research Chris Loewald warned this week that a higher country risk premium placed upward pressure on interest rates.
His comments came as Moody’s Investors Service cut its economic growth forecasts for South Africa.
"A weaker growth outlook automatically inflates fiscal and debt ratios – to the detriment of sovereign risk ratings," PwC said.