More price pain expected for South Africans in 2024
South Africans are expecting increased prices in 2024 despite a recent decline in headline inflation in the country.
Stats SA reported this week that headline CPI eased to 5.5% in November from 5.9% in October, with declines in fuel and transport costs primarily causing the overall drop.
However, after declining in Q3 2023, analysts, business people and trade unions have increased their headline inflation expectations for the next two years.
As per the Bureau for Economic Research’s (BER’s) latest Inflation Expectations Survey for Q4 2023, respondents continued to believe that inflation in 2023 will stand at 6.1%.
But they now also expect inflation to take longer to ease over the long term, reaching 5.7% in 2024 and 5.6% in 2025 (up from previous forecasts of 5.5% and 5.3%, respectively).
“This upward revision was driven by business people and trade unionists increasing their forecasts; analysts held their forecast virtually unchanged over the forecast horizon,” the BER said.
“These revisions were done against the background of headline inflation accelerating from 4.7% in July (as reported during the third quarter survey) to 5.9% in October (reported during the fourth quarter survey).”
The forecast of five-year inflation expectations also increased from 5.1% to 5.2%, primarily driven by trade unions increasing their forecast, whilst analysts did so marginally.
The expectations from households stand out significantly from other respondents.
The one-year-ahead inflation expectations of households increased from 7.0% in Q3 to 7.2%, whilst the five-year forecast increased from 9.8% to 10.2%.
Despite the expected inflation increases, there was no significant change to the economic growth outlook for 2023 and 2024.
Survey respondents expect GDP to grow by 0.9% in 2023 and 1.3% in 2024 and then grow by 1.3% in 2023 (compared to 0.8% and 1.4% before).
The three social groups agreed that salaries and wages will increase by roughly 5% in 2023 and 2024.
“This is slightly lower for next year (5.1%) compared to what was expected before (5.4%),” the BER said.
Read: Alarm bells for South Africans earning more than R20,000 a month
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