Crucially, these targets are the costing assumptions for departments and provinces for the next three years, which the BER said could prove to be problematic.<\/p>\n\n\n\n
“This indicates that the Treasury is working around an MTBPS inflation forecast of 4.5%, not 3%<\/strong>,” it said.<\/p>\n\n\n\n The BER noted that the Treasury has to reflect unbiased and policy-neutral outcomes, so the planned inflation target change to 3% cannot be included in the forecast or guidelines until it is officially changed.<\/p>\n\n\n\n However, if government departments are doing their forward planning on these guidelines, there is a serious risk of fiscal slippage (overspending) happening<\/strong> when the inflation target is brought lower.<\/p>\n\n\n\n “The Treasury\u2019s inflation planning baselines are above market consensus, which may create built-in real spending increases,” the BER said.<\/p>\n\n\n\n The question of South Africa’s new inflation target is still up in the air, with some economists and analysts expecting it to be made official before the end of the calendar year, and others anticipating an announcement in 2026.<\/p>\n\n\n\n Reserve Bank Governor Lesetja Kganyago said on 1 July that a long-running review of the 3% to 6% inflation goal would be finalised \u201cvery soon\u201d. <\/p>\n\n\n\n Some, like Citibank, say the change could come as early as next week, when the SARB’s Monetary Policy Committee (MPC) makes its next interest rate move.<\/p>\n\n\n\n While the actual announcement of the target change will come from the Finance Minister, the BER said there is a slight possibility that the governor will firms up timelines next week.<\/p>\n\n\n\n Headline inflation was recorded this week at 3%, still far lower than the 4.5% target, and at the lowest edge of the broader Reserve Bank target range.<\/p>\n\n\n\n Given this, the BER said it expects the MPC to cut interest rates by another 25bps, although there is a slight chance that it decides to keep rates on hold. <\/p>\n\n\n\n “In addition to the actual decision, the SARB is expected to publish a 3% inflation scenario once again. It will be interesting to see if and how this has changed relative to May,” it said.<\/p>\n\n\n\n As for when the change will be reflected in the hard data, the BER said that the next time the Treasury releases its inflation forecast would be when the new-look fiscal framework comes out.<\/p>\n\n\n\n This is expected shortly after the Quarterly Bulletin is released in the last week of September.<\/p>\n","protected":false},"excerpt":{"rendered":" Economists have flagged a big risk in the National Treasury’s latest budget announcements, which could lead to government overspending.<\/p>\n","protected":false},"author":10,"featured_media":816536,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[14829,3796,3619],"class_list":["post-832998","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ber","tag-national-treasury","tag-sarb"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832998","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=832998"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832998\/revisions"}],"predecessor-version":[{"id":833005,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/832998\/revisions\/833005"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/816536"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=832998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=832998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=832998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}New inflation target uncertainty<\/h2>\n\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/06\/Lesetja-Kganyago-reserve-bank-mpc-sarb-e1750250940678.jpeg\")
<\/a>