South African inflation expectations fall after setting of 3% target

Expectations for inflation in South Africa in 2026 have dropped sharply since the finance minister announced a lower 3% inflation target, a fourth quarter survey of business people, trade union officials and analysts showed on Friday, 12 December 2025.

12 Dec 2025

Source: Reuters.

The survey is commissioned by the central bank and guides its thinking on the appropriate level of interest rates.

The average forecast was for inflation of 3.8% next year and 3.7% in 2027, down from 4.2% in both years previously.

The survey was conducted between 17 November 2025 and 4 December 2025.

Finance Minister Enoch Godongwana announced the lower inflation target on 12 November after months of lobbying by the central bank, which argued the previous target range of 3%-6% was making the economy uncompetitive.

Analysts gave the lowest inflation forecasts in the survey, of 3.5% in 2026 and 3.4% in 2027.

Business people expect inflation of 3.9% in 2026 and 4.0% in 2027, while trade-union officials expect inflation of 3.9% in 2026 and 3.8% in 2027.

The South African Reserve Bank's next interest-rate announcement is scheduled for 29 January 2026.

At its last policy announcement on 20 November it reduced its key lending rate by 25 basis points, easing concerns the new inflation target would prevent it from cutting rates.