The Bureau for Economic Research (BER) third-quarter Inflation Expectations Survey, commissioned by the South African Reserve Bank (SARB), revealed declining inflation expectations among analysts, businesspeople, and trade unions, although household expectations increased. The survey, which measures inflation expectations from various social groups, plays a key role in informing the SARB’s Monetary Policy Committee (MPC) when determining interest rates.

The survey showed that analysts, businesspeople, and trade unions now expect headline inflation to be 5.1% in 2023, down from the previous forecast of 5.3%. Expectations for 2025 and 2026 also dropped slightly to 4.8%, reflecting improved inflation outlooks. Businesspeople expect inflation to remain above 5%, but analysts foresee a rate closer to SARB’s midpoint target of 4.5%. On average, these groups expect inflation to average 4.8% over the next five years, slightly lower than their earlier estimate of 4.9%.

Household inflation expectations, however, rose sharply, reversing the downward trend seen earlier in 2023. Their one-year-ahead inflation expectation increased by 0.6 percentage points to 6.9%, and five-year-ahead expectations jumped by 0.9 percentage points to 10.6%, the highest since mid-2023.

Regarding wage growth, trade unions made significant upward revisions, forecasting wage increases of 5.6% in 2024 and 5.9% in 2025, contributing to slightly higher overall inflation forecasts for 2025 and 2026. GDP growth expectations remained just under 1% for 2024, with a slight upward revision to 1.5% for 2025.