Inflation is expected to average 5.1% this year
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Loading... - Michael Frida
- 16 Sep 2024
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Inflation is anticipated to average 5.1% this year, reflecting a continued downward trend under current economic conditions, which bodes well for the repo rate. The inflation expectations of analysts, businesspeople, and trade unions have declined further in the third quarter, with projections indicating inflation will ease to 4.8% in 2025 and 2026.
According to the Bureau for Economic Research's (BER) Inflation Expectations Survey for Q3, the groups predicted consumer inflation would register at 5.3% for 2024 and decrease to 4.9% by 2026.
This quarterly survey, commissioned by the South African Reserve Bank (SARB), measures inflation expectations from analysts, businesspeople, trade unions, and households, each offering different perspectives on the real economy, financial markets, and wage trends, all of which impact inflation.
The SARB’s Monetary Policy Committee (MPC) considers the survey results among other factors when setting the repo rate. Analysts predict the lowest inflation, while businesspeople expect inflation to stay above 5% through 2026. Trade union representatives forecast wage increases of 5.6% in 2024 and 5.9% in 2025, driving up overall inflation projections.
The survey indicates GDP growth is expected to stay just below 1% in 2024, with a slight improvement to 1.5% in 2025. However, rising inflation expectations from households, now at 6.9% for the coming year and 10.6% over five years, could trigger concerns for the MPC if inflation expectations move significantly above the 4.5% target or other indicators deteriorate.
