BUREAU FOR ECONOMIC RESEARCH (BER) SOUTH AFRICA INFLATION EXPECTATIONS SURVEY FIRST QUARTER 2026 Release Date: March 16, 2026 ================================================================================ EXECUTIVE SUMMARY In the first quarter of 2026 (the second survey after the inflation target changed to 3%), the average five-year inflation expectations of the three professional groups declined slightly to a record low of 3.6% (from 3.7% previously). Next-year expectations also declined marginally (0.1 percentage points) to 3.6%. In contrast, household inflation expectations reversed its downward trend; one-year expectations were measured at 5.4% (5.3% previously), while five-year expectations rose from 7.7% to 8.4%. ================================================================================ SURVEY OVERVIEW The Bureau for Economic Research, commissioned by the South African Reserve Bank, conducts quarterly inflation expectation surveys among four key societal groups: 1. Financial analysts and economists 2. Business people 3. Trade union representatives and employers' organisations 4. Households The survey is based on international best practices and employs direct quantitative methods, where respondents provide specific inflation forecasts rather than relative assessments. The questionnaire methodology follows guidelines established by the Reserve Bank of New Zealand. ================================================================================ KEY FINDINGS - PROFESSIONAL GROUPS (ANALYSTS, BUSINESS, LABOUR) Five-Year Ahead Inflation Expectations: - Q1 2026: 3.6% (record low) - Q4 2025: 3.7% - Change: -0.1 percentage points One-Year Ahead Inflation Expectations: - Q1 2026: 3.6% - Q4 2025: 3.8% - Change: -0.2 percentage points Breakdown by Group: - Financial analysts provided the lowest forecasts - Business people provided mid-range forecasts - Trade union representatives provided comparatively higher forecasts Context: This represents the second inflation expectations survey conducted following South Africa's inflation target revision to 3% (with a tolerance band of ±1 percentage point) announced in November 2025. ================================================================================ KEY FINDINGS - HOUSEHOLDS One-Year Ahead Expectations: - Q1 2026: 5.4% - Q4 2025: 5.3% - Change: +0.1 percentage points (reversed downward trend) Five-Year Ahead Expectations: - Q1 2026: 8.4% - Q4 2025: 7.7% - Change: +0.7 percentage points Interpretation: Household inflation expectations reversed the downward trajectory observed in prior quarters. This suggests households may be concerned about price pressures despite the professional consensus pointing to lower inflation ahead. ================================================================================ OVERALL INFLATION EXPECTATIONS Average across all professional groups and periods: Q1 2026: 3.6% Q4 2025: 3.7% Change: -0.1 percentage points ================================================================================ SURVEY CONTEXT AND MONETARY POLICY IMPLICATIONS Recent Economic Data: - January 2026 CPI inflation: 3.5% year-on-year - South African Reserve Bank inflation target: 3% (revised November 2025) - Tolerance band: ±1 percentage point - Next SARB interest rate decision: March 26, 2026 The survey results suggest that: 1. Professional forecasters have grown more confident in the South African Reserve Bank's inflation-fighting credibility, reflected in declining five-year expectations. 2. The divergence between professional (3.6%) and household (5.4%-8.4%) expectations indicates differing confidence levels among population segments in the central bank's ability to maintain inflation near the new, lower 3% target. 3. The record low five-year expectations signal that inflation is expected to converge toward the central bank's target in the medium to long term. 4. Global factors—including oil prices, exchange rates, and geopolitical tensions—continue to influence inflation expectations, particularly regarding near-term food price pressures. ================================================================================ SURVEY METHODOLOGY Panel Composition: Business Sector Panel: 1,061 respondents - Manufacturing: 38.2% - Retail trade: 22.7% - Services: 19.8% - Wholesale trade: 7.2% - Agriculture & forestry: 6.2% - Other sectors: 6.1% Financial Sector Panel: 40 respondents - Financial brokers & advisors: 65% - Banks: 27.5% - Insurance companies: 7.5% Labour Sector Panel: 25 representatives of trade unions and employer organisations Household Survey: 2,500 area-stratified probability sample - Covers all race groups across metropolitan areas, cities, towns, and villages - Stratified by income, education, and age Questionnaire Administration: - Mailed three weeks before due date - Respondents may reply by post, fax, or internet - Historical inflation data provided for context (5-year average and most recent year) - Responses calculated using the mean average - "Don't know" responses excluded ================================================================================ TECHNICAL NOTES The survey gathers expectations on: - CPI inflation (current year and two subsequent years) - CPIX inflation (current year and two subsequent years) - Economic growth - Prime overdraft rate - Rand/US dollar exchange rate - Wage and salary increases (current and following year) Financial sector participants additionally provide forecasts on: - Yield on R153 government bond - M3 money supply growth - Manufacturing production capacity utilisation Household survey focuses on current-year inflation expectations only, given the higher cost of personal interviews. ================================================================================ DATA QUALITY The survey results satisfy basic statistical requirements. An independent validation conducted in March 2000 confirmed consistency between the dedicated inflation expectations survey and broader business survey forecasts (with allowance for timing and wording differences). Historical information provided in the questionnaire helps establish a consistent benchmark across respondents, reducing bias from extreme recent observations while allowing for informed deviations based on respondent judgment. ================================================================================ END OF REPORT