South African inflation and salary expectations revealed

Hugo Pienaar

Average inflation expectations of analysts, businesspeople, and trade unions for 2022 increased from 6.5% in the third quarter of 2022 to 6.6% in the fourth quarter.

Expectations for 2023 rose from 5.9% to 6.1%, and for 2024, it increased from 5.3% to 5.6%.

These findings form part of the Bureau for Economic Research’s (BER’s) Inflation Expectations Survey for Q4 2022.

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.

The 2022 fourth-quarter survey of financial analysts, business executives, and representatives of the trade union movement was conducted between 21 November and 8 December 2022.

Since the previous survey, all social groups revised their forecasts upwards.

The magnitude of the upward revision increased from an average of 0.1% pts for 2022 to 0.2% pts for 2023 and 0.3% pts for 2024.

The only exception is analysts, who kept their expectations for 2023 unchanged.

Average five-year inflation expectations rose marginally from 5.4% in the third quarter to 5.5% in the fourth quarter.

It can be attributed to businesspeople who revised their expectations upwards from 5.6% to 6.1%.

After moderating from 6.5% to 5.8% in the third quarter, household inflation expectations during the next 12 months rebounded to 6.3% in the fourth quarter.

Average household inflation expectations over the next five years remained unchanged at 8.4% in the fourth quarter.

Beyond 2022, the three social groups have different views on economic growth.

  • Analysts expect the economy to continue losing momentum, with growth dropping to only 1.1% in 2023.
  • The other two groups expect growth to be retained relatively close to their 2022 forecasts.

On average, growth is expected to decelerate slightly to 2.0% in 2023.

In the case of salary and wage increases, it seems that all three social groups have settled around 6% annually for both 2022 and 2023.

None of the groups made any significant revisions to their forecasts compared to the third quarter.

Analysts expect wages to increase by 5.7% in 2023, while businesspeople expect a higher rate of 6.1% for 2023.


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