SOUTH AFRICA’S INFLATION OUTLOOK HOLDS STEADY AS FUTURE FORECASTS EASE

Inflation expectations in South Africa remained stable in the third quarter of 2026 after rising sharply in the previous quarter amid an oil price shock linked to the conflict involving Iran. A quarterly survey commissioned by the South African Reserve Bank showed that expectations for headline consumer inflation this year remained unchanged at 4.4 per cent.

The survey, which covers analysts, business representatives, trade union officials and households, is used by the central bank as one of the indicators in assessing monetary policy and interest rate decisions. While the outlook for 2026 remained unchanged, forecasts for the following two years were revised lower.

Average inflation expectations for 2027 fell to 4.0 per cent from 4.2 per cent, while the forecast for 2028 declined to 3.8 per cent from 3.9 per cent. The central bank closely monitors longer-term expectations because changes in interest rates typically take between 12 and 24 months to have their full effect on economic activity and inflation.

South Africa’s inflation rate stood at 4.3 per cent year-on-year in July, according to the latest available data. The Reserve Bank is targeting inflation at 3 per cent, with a tolerance range of one percentage point on either side of the target.

The latest survey comes ahead of the Reserve Bank’s next monetary policy announcement scheduled for September 23. The bank kept its main policy rate unchanged at 7 per cent in July after raising it by 25 basis points in May, as policymakers continued to assess inflation risks, economic growth and the impact of global energy prices.