South African inflation expectations drop sharply in quarterly survey
The average forecast for consumer inflation during 2025 fell to 3.9% in the second-quarter survey from 4.4% in the previous quarter, the first time in more than four years that the current year's forecast has been below 4%.
For 2026, the average dropped to 4.3% from 4.6% in the first quarter, and for 2027 it fell to 4.5% from 4.7%.
The South African Reserve Bank, or SARB, which commissions the survey, takes inflation expectations into account when taking its monetary policy decisions.
"The second-quarter survey reflects a broad-based and significant decline in the inflation expectations. ... This decline was present among all three social groups and for the entire forecast horizon," the Bureau for Economic Research, which conducts the survey, said in a report.
The SARB targets inflation of 3%-6% but has been pushing to lower the target. Its preference is for a 3% objective, it said at its last policy meeting in May, when it cut its key lending rate by 25 basis points to 7.25% (ZAREPO=ECI), opens new tab.
Consumer inflation was 2.8% year-on-year in May (ZACPIY=ECI), opens new tab, the third month in a row it has been below 3%.
The SARB's next monetary policy announcement is scheduled for July 31.
The survey also showed analysts, business people and trade unions had become more pessimistic about economic growth, on average expecting growth of 0.9% this year whereas they had predicted growth of 1.2% in the last survey.
Africa's biggest economy expanded just 0.1% in the first quarter of 2025, dragged down by a poor performance by its mining and manufacturing sectors.
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