The average inflation forecast for South Africa in 2025 is now projected at 4.3%, down from 4.5%. Consumer inflation was reported at 3.2% in January, with expectations of steady figures for February. Analysts remain optimistic about inflation rates while economic growth forecasts are below government predictions, causing political contention over proposed VAT raises.
In the first quarter of the year, the average inflation forecast for 2025 in a prominent survey commissioned by the South African central bank has declined further, now standing at 4.3%, below the bank’s target rate. This data, provided by the Bureau for Economic Research (BER), reflects the expectations of analysts, business leaders, and trade union officials, indicating a drop from the previous forecast of 4.5%.
The South African Reserve Bank aims to maintain inflation at approximately 4.5%, the midpoint within its target range of 3% to 6%. In January, the most recent data available, the headline consumer inflation rose to 3.2% year on year. Upcoming inflation data for February is expected to align closely with this figure, although economists predict that the central bank will refrain from cutting rates during the scheduled meeting on Thursday.
The Reserve Bank is characterized by its careful monetary policy stance, with the governor highlighting recent concerns regarding global trade tensions and a possible increase in local value-added tax (VAT). Meanwhile, the inflation forecast for 2026 remains unchanged at 4.6%, as reported by the BER survey.
Among the surveyed groups, analysts have displayed the most optimism regarding inflation, predicting rates of 3.9% for the current year and 4.3% for the following year. Furthermore, respondents’ average economic growth forecast for 2025 stands at 1.2%, which is significantly lower than the government’s projected growth rate of 1.9% announced in last week’s budget. This budget proposal continues to face challenges due to a deadlock in South Africa’s coalition government, as various political parties have opposed a controversial plan to raise VAT.
The recent inflation forecast for South Africa shows a downward trend, with an average expectation of 4.3% for 2025 according to the Bureau for Economic Research. The country’s central bank aims to maintain inflation near 4.5% within its target band while prioritizing careful monetary policy. The economic growth forecast also remains muted, highlighting ongoing political and economic challenges.
Original Source: www.zawya.com
