BER inflation survey Q3: Inflation to pick up in 2020 to 5.0%

Analysts, business people, and trade unionists are predicting a rise in inflation to 5.0 per cent in 2020, up from 2019's 4.6 per cent, according to the latest inflation expectations survey for the third quarter of 2019. The survey indicates a deterioration in expectations for the upcoming quarter, suggesting a belief among respondents that inflation will trend higher than current levels. Economist Nicolaas van der Wath from the Bureau for Economic Research sheds light on the factors driving this anticipated increase in inflation. Respondents foresee inflation being fueled by several key factors, including the exchange rate of the rent against the dollar, which is expected to hover around 15.15 by the end of next year. Additionally, respondents anticipate an uptick in salaries and wages, with projections standing at 5.5% for next year, slightly higher than the current 5.2% forecast. While these levels are lower than previous forecasts, respondents attribute the expected wage growth to both the weak economic environment and the challenges faced by companies. The survey, conducted from July 30 to September 6, did not factor in the recent spike in oil prices. However, analysts believe that energy prices could play a significant role in influencing inflation levels given their volatility. Moreover, the projection for higher wages aligns with the prevailing economic conditions and the struggles faced by many businesses. Despite concerns about economic growth, respondents across the business, analyst, and trade union sectors anticipate an improvement in economic fortunes next year. Looking at the historical data, the survey has shown a strong correlation with past inflation results, though its accuracy fluctuates depending on the stability of inflation trends. Overall, the survey provides valuable insights into the expected trajectory of inflation and its implications for the South African economy.