South Africa's First Quarter Inflation Expectations Fall to Historic Lows

Investing.com – According to a survey released on Monday, South Africa’s inflation expectations for the first quarter of 2026 have further decreased, with the five-year average inflation forecast reaching the lowest level on record.

The quarterly survey, commissioned by the South African Reserve Bank, shows that analysts, businesspeople, and labor unions have an average inflation forecast of 3.6% for 2026, down 0.2 percentage points from the previous survey.

The five-year average inflation forecast is also 3.6%, down 0.1 percentage points, marking the lowest reading to date. The survey provides a reference for the central bank in setting appropriate interest rates.

Analysts have the lowest inflation forecast for this year, followed by businesspeople, then labor unions.

The inflation rate in January was 3.5% year-on-year, which is the latest available data.

In November last year, the central bank lowered its inflation target to 3%, with a tolerance band of 1 percentage point.

South African policymakers’ commitment to maintaining low inflation has boosted investor confidence.

Since September 2024, the central bank has been gradually cutting interest rates, with a pause at times. In its most recent meeting in January, the central bank kept the policy rate unchanged. Some analysts predict that, given the global economic turmoil triggered by the US-Israel conflict with Iran, the central bank may hold steady again.

The next interest rate decision by the South African Reserve Bank is scheduled for March 26.

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