Business eases inflation expectations for next year
Analysts and businesspersons have lowered their forecasts for average inflation expectations from 6.2% in the second quarter, to 6% in the third quarter, Stellenbosch University’s Bureau for Economic Research said on Thursday.
However, it noted that trade unions had left their forecasts unchanged.
Further, analysts expected inflation to moderate further to 5.7% in 2017 and to 5.3% in 2018, but businesspersons expected inflation to remain unchanged at 6.1% and trade unions saw only a marginal decline to 6.2% from 6.3% in 2017.
Businesspersons further lowered their five-year forecast from 6.3% to 6% – the lowest number ever recorded since the first survey in the third quarter of 2011.
Compared with the second quarter, survey respondents did not make much of a change to their view on economic growth. They expect growth to accelerate from 0.6% in 2016 to 1.3% in 2017.
The respondents now expect the prime overdraft rate to be lowered by only 25 basis points to 10.25% before the end of the year, compared with their expectations for a 50 basis point reduction before year-end in the second quarter.
Regarding salary and wage increases in the third quarter, the survey respondents practically retained their second quarter view. They still expect salaries to rise by 7.1% this year, and then accelerate to an increase of 7.3% next year.
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