An inflation expectations survey for Q2 will kick off the data calendar this week and provide crucial guidance for the SA Reserve Bank’s decision on interest rates next month.
Due to the Middle East conflict and its impact on oil prices, the domestic inflation outlook has plunged since the Bureau for Economic Research (BER) first quarter survey, when the average inflation expectation for 2026 among analysts, business managers and trade union leaders eased to 3.6% from 3.8%.
The Reserve Bank raised its benchmark policy rate by 25 basis points to 7% in May, after data inflation accelerated to 4% in April, hitting the top of the 2%-4% tolerance band for its 3% target adopted last year.
The latest BER survey was carried out from May 18 to June 4, before oil prices pulled back on hopes of a permanent resolution to the war pitting the US and Israel against Iran.
“Thus, the Q2 inflation expectations data could be somewhat backward-looking,” Absa said in its economics weekly report.
“However, any material drift higher in inflation expectations would be an unwelcome development for the MPC.”
On Tuesday the Bank will publish its June quarterly bulletin, providing insight into SA’s Q1 economic performance, including household finances which, Nedbank says, “appear to have remained firm on the back of lower interest rates and rising disposable income, though weak employment continued to constrain”.
Later on Tuesday, the SA Revenue Service will publish its trade balance for May. In April the surplus nearly halved to R15.2bn as imports rose at a higher pace than the increase in exports.
“The trade surplus is likely to narrow in May. Though global oil prices began to ease during the month, the earlier run-up probably continued to filter through to the domestic economy, keeping the overall import bill high,” Nedbank said.
Also on Tuesday, the department of mineral & petroleum resources will announce the latest monthly adjustment for domestic fuel prices, expected to ease in line with lower global oil prices.
On Wednesday, Absa will publish its purchasing managers’ index for June for the manufacturing sector. Factory sentiment eased by 1.8 points to 50.8 in May.
Also on Wednesday, Naamsa will release new vehicle sales numbers for June.
On Friday S&P Global will publish its own PMI, encompassing SA’s entire private sector. - Business Day
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