The South African inflation forecast for 2025 fell to 4.3% in the first quarter, below the Reserve Bank’s target. The latest consumer inflation is at 3.2%. Analysts anticipate a growth rate of 1.2% for 2025, amid rising economic challenges.
The average inflation forecast for South Africa in 2025 has decreased further, as revealed by a closely monitored survey from the Bureau for Economic Research (BER) commissioned by the central bank. Analysts, business professionals, and trade union representatives now anticipate an inflation rate of 4.3%, down from the previous expectation of 4.5%. This adjustment places the forecast below the South African Reserve Bank’s target of 4.5%, which is the midpoint of its 3%-6% target range.
In January, the headline consumer inflation slightly increased to 3.2% year-over-year, marking the latest data available. The projected inflation data for February is anticipated to align closely with January’s figure. Economists surveyed by Reuters predict the central bank will maintain its current rates, suspending its rate-cutting cycle during the upcoming Thursday meeting.
The South African Reserve Bank is recognized for its careful monetary policy. Recently, its governor has warned of potential risks associated with global trade tensions and the possibility of a local value-added tax (VAT) hike. In regard to 2026, the average inflation forecast remains unchanged at 4.6% according to the BER survey.
Among the surveyed groups, analysts display the most optimism, predicting inflation rates of 3.9% for the current year and 4.3% for the following year. Additionally, the respondents expect an average economic growth rate of 1.2% for 2025, significantly lower than the government’s earlier projection of 1.9% noted in last week’s budget. The political dynamics surrounding the budget remain complicated, as various parties are resisting it due to a contentious proposal to increase VAT.
The recent BER survey indicates a continued decline in the inflation forecast for South Africa, reflecting cautious optimism among analysts despite economic challenges. With a forecast of 4.3% inflation for 2025, below the target range of the South African Reserve Bank, and a stagnant growth projection of 1.2%, the nation faces significant fiscal hurdles ahead, particularly regarding political consensus on the budget and potential tax hikes.
Original Source: www.zawya.com
