Experts, business, and unions expect higher inflation for longer

After declining significantly in the third quarter, the average headline CPI inflation expectations from analysts, business people, and trade unions for the next two years increased again in the fourth quarter of 2023. 

These findings form part of the Bureau for Economic Research’s (BER’s) Inflation Expectations Survey for Q4 2023.

The South African Reserve Bank (SARB) commissioned the BER to conduct a quarterly survey to measure inflation expectations and other macroeconomic variables related to inflation.

Four social groups are covered: analysts, businesspeople, senior representatives of trade unions, and households.

In Q4, average expectations for 2023 remained unchanged at 6.1%.

However, respondents expect inflation to be 5.7% in 2024 (up from 5.5%) and 5.6% in 2025 (up from 5.3%).

This upward revision was driven by business people and trade unionists increasing their forecasts while analysts held theirs virtually unchanged over the forecast horizon. 

These revisions were done against the background of headline inflation accelerating from 4.7% in July to 5.9% in October.

The five-year inflation expectations forecast ticked from 5.1% to 5.2%, mainly driven by trade unions raising their forecast and a marginal increase from analysts.

The one- and five-year-ahead inflation expectations of households increased marginally in the fourth quarter. 

The one-year forecast is up from 7.0% in Q3 to 7.2% currently, while the five-year forecast increased from 9.8% to 10.2% over the same period.

There was no major change to the outlook of economic growth for 2023 and 2024 in the fourth quarter.

Survey respondents expect GDP growth to be 0.9% – up from 0.8% – this year and accelerate to 1.3% next year – down from 1.4%.

The three groups in the survey are in general agreement that salaries and wages will increase by around 5% in both 2023 and 2024. 

This is slightly lower for next year (5.1%) compared to what was expected before (5.4%).


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