Research company Bureau for Economic Research (BER) finds in its latest Inflation Expectations Survey for the first quarter of the year that respondents expect headline consumer inflation this year to be 4.3%.

The forecast was revised downward from an initial 4.5% expectation for consumer inflation made late last year in the prior survey.

BER conducts a quarterly survey to measure inflation expectations and other macroeconomic variables related to inflation, on behalf of the South African Reserve Bank, which takes the survey into consideration when it decides on the interest rate. 

This was despite a slight uptick in reported yearly inflation between the two survey periods – from 2.8% in October last year to 3.2% in January.

Looking further ahead, respondents’ expectations for 2026 were unchanged at 4.6%, though they expect a slight increase to 4.7% in 2027.  

BER says analysts are more optimistic among the three social groups, expecting inflation of only 3.9% this year, then stabilising at 4.3% in the following two years.

Business people anticipate a rate of 4.6% this year, then 4.8% over the next two years.

On the pessimistic side, trade union officials forecast an acceleration from 4.5% this year to 5% by 2027.

In terms of inflation over the next five years, the three social groups anticipate an average of 4.7%, marginally above the targeted midpoint and slightly up from 4.6% before.

Against a similar backdrop, households also revised their forecast of inflation in the next year down significantly. They now expect a rate of 5.7% in the next 12 months, compared with 6.6% during the fourth quarter of last year.

In line with their lower inflation forecast during the first quarter of this year, the three social groups also lowered their expectations for an increase in salaries and wages this year.

They now foresee that, on average, wages will rise by 4.5% this year, which is 0.4 percentage points lower than the fourth-quarter forecast.

However, they foresee a more substantial increase next year of 4.8%.

The survey respondents expect economic growth of 1.2% this year, which is slightly lower than the 1.5% growth rate that was anticipated during the fourth-quarter survey.

Looking further ahead, they forecast economic growth to accelerate very little, reaching only 1.4% in 2026.