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BER Inflation Expectations Up Across 2022/23/24

SOUTH AFRICA
MNI (London)

The Q4 2022 BER inflation expectations survey saw CPI expectations inch up by 0.1pp to +6.6% in Q4, pushing further above the SARB's 3-6% target range.

  • 2023 expectations increased by 0.2pp to +6.1%, and 2024 by 0.3pp to +5.6%. 5-year expectations ticked up by 0.1pp to +5.5%.
  • 12-month household inflation expectations rebounded to +6.3% in Q4, after having cooled to +5.8% in Q3.
  • Salary and wages are projected to increase by approx. +6% in both 2022 and 2023.
  • Average growth outlooks ticked down to +2.0% for 2023, however, the analyst survey group anticipates this to be substantially softer at +1.1%.
  • Despite little react in USDZAR, this data will be of concern to the SARB ahead of their Jan 26 rate decision. Hotter CPI expectations increase the risk of a 50bp hike as the bank tightens beyond its assumed neutral rate in order to tame sticky inflation.
  • Attention turns to the December CPI data due on Wednesday, anticipated to edge down 0.1pp to +7.3% y/y in the headline print, whilst core CPI will likely accelerate by 0.1pp to +5.1% y/y.

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