JOHANNESBURG, Dec 12 – Inflation expectations in South Africa have declined markedly since the government adopted a lower 3% inflation target, according to a fourth-quarter survey released on Friday.
The survey, commissioned by the South African Reserve Bank (SARB), draws on views from business leaders, trade union officials and analysts, and plays a key role in shaping monetary policy decisions.
The average forecast for inflation is now 3.8% for 2026 and 3.7% for 2027, down from earlier projections of 4.2% for both years. The shift follows Finance Minister Enoch Godongwana’s announcement on November 12 that South Africa would move from its previous 3%–6% range to a fixed 3% inflation target, a policy long advocated by SARB to improve competitiveness.
Analysts provided the most optimistic projections, expecting inflation to average 3.5% in 2026 and 3.4% in 2027. Business leaders and trade union representatives anticipate slightly higher outcomes but still below earlier estimates, with expectations clustered around 3.8% to 4.0%.
The survey, conducted between November 17 and December 4, suggests that the new target has begun to re-anchor expectations, strengthening SARB’s credibility as it navigates a gradual rate-cutting cycle.
SARB is scheduled to announce its next interest rate decision on January 29. At its previous meeting on November 20, the central bank reduced its benchmark lending rate by 25 basis points, easing fears that the new inflation target might limit monetary policy flexibility.
