Expectations for inflation in South Africa in 2026 have fallen sharply following the government’s decision to aim for a lower inflation target, according to a new survey released on Friday.
The survey, which is commissioned by the South African Reserve Bank (SARB), is closely watched by policymakers and helps shape decisions on interest rates.
It was carried out between November 17 and December 4 among business leaders, trade union officials and economic analysts.
Inflation forecasts revised down
Respondents now expect inflation to average 3.8% in 2026 and 3.7% in 2027. That is a notable drop from earlier forecasts of 4.2% for both years.
Analysts were the most optimistic group, predicting inflation of 3.5% in 2026 and 3.4% in 2027. Business people were more cautious, forecasting inflation at 3.9% next year and 4.0% the year after.
Trade union officials expect inflation of 3.9% in 2026 and 3.8% in 2027.
Lower target reshapes expectations
Finance Minister Enoch Godongwana announced the new 3% inflation target on November 12, following months of pressure from the central bank.
The SARB had argued that the previous target range of 3% to 6% was too high and was hurting South Africa’s economic competitiveness.
The announcement appears to have had an immediate impact on how inflation is viewed over the medium term, with expectations now clustering closer to the new target.
Interest rate decision in focus
The shift in inflation expectations comes as investors look ahead to the central bank’s next policy move. The SARB is due to announce its next interest rate decision on January 29.
At its previous meeting on November 20, the central bank cut its key lending rate by 25 basis points. That decision helped calm concerns that the tighter inflation target could limit the bank’s ability to lower borrowing costs to support the economy.