South Africa’s inflation rate ticked up slightly in October, setting the stage for what analysts say will be a tight and closely watched interest rate decision by the South African Reserve Bank (SARB) later this week.

According to the latest data from Statistics South Africa, headline consumer inflation rose to 3.6% year-on-year, up from 3.4% in September, though still comfortably within the central bank’s newly announced 3% inflation target, which allows for a 1-percentage-point tolerance band. Economists surveyed by Reuters had expected inflation to come in higher at 3.7%, making October’s outcome slightly softer than forecast.

A closer breakdown of the report showed mixed movement across major spending categories. Prices in areas such as transport and recreation heated up during the month, while inflation in restaurants, food, and several other consumer segments cooled, easing pressure on households.

Before the inflation figures were released, economists were already divided on how the SARB might respond at its upcoming monetary policy meeting. Out of those polled by Reuters, 14 analysts expected the bank to keep the repo rate at 7.00%, while 15 projected a 25-basis-point rate cut, reflecting the growing uncertainty in the market.

Independent economist Elize Kruger, who previously anticipated no rate change, shifted her outlook following the new data, suggesting a cut may now be more likely. Meanwhile, Johannes Khosa of Nedbank maintained his team’s expectation of a quarter-point reduction, noting that inflation still appears well-contained and broadly stable.

At its previous meeting in September, the SARB left interest rates unchanged, stressing the importance of assessing the cumulative impact of earlier easing measures before taking further action. With inflation holding near target and economic signals mixed, Thursday’s decision is expected to be one of the most finely balanced calls of the year.