FILE PHOTO: A customer compares prices while shopping at a Pick and Pay shop in East London, in the Eastern Cape province, South Africa, March 17, 2023. REUTERS/Siphiwe Sibeko/File Photo

JOHANNESBURG, June 30 (Reuters) – South African inflation expectations rose sharply in the second quarter of 2026, a survey showed on Tuesday, as the oil price shock triggered by the Iran war made analysts, business people and trade unions all raise their forecasts.

  • The quarterly survey is commissioned by the central bank and guides its thinking on the appropriate level of interest rates.
  • The average forecast of analysts, business people and trade unions was for headline consumer inflation of 4.4% this year, up from 3.6% in the previous survey.
  • The average forecasts for 2027 and 2028 rose to 4.2% and 3.9%, respectively, also up from 3.6%. Those forecasts are important as the central bank says interest rate changes affect the economy with a lag of about 12 to 24 months.
  • Inflation quickened to 4.5% year on year in May, the highest reading since July 2024.
  • The central bank targets inflation of 3% with a 1-percentage-point tolerance band either side of that.
  • The bank raised its policy rate by 25 basis points to 7% at its last meeting in late May, its first hike in three years.
  • Its next rate announcement is scheduled for July 23.