South Africa’s inflation target remains well above the emerging market average. This imposes unnecessary costs on households, firms and economic growth. Benefits to lowering the inflation target to the emerging market average include better predictability of investment and savings returns and clearer relative price signals. The policy discussion in South Africa, however, tends to focus on the short-term transition costs of lowering inflation, while ignoring the medium- to long-run benefits of a permanently lower inflation rate. We employ two approaches to calculate the sacrifice ratio for South Africa to get a clearer view of the costs of reducing the inflation rate. The trend analysis approach developed by Ball (1994) shows that the most recent reduction in trend inflation (2016–2019) was not associated with output losses from policy setting. The structural vector autoregression approach developed by Cecchetti and Rich (2001) similarly produces a very low sacrifice ratio of just over 0.5 for the whole post-apartheid period. Using statistical methods, we further show that lower headline inflation will also reduce administrative price inflation. This can contribute to clearer relative price signals in the economy.