South Africa central bank says second-round inflation risks rise
TLT•South Africa’s central bank said second-round inflation risks had increased as oil prices stayed higher for longer and El Niño clouded the outlook. It expects inflation to return to its 3% target in the fourth quarter of 2027.
1. Inflation risks increase
The South African Reserve Bank said the risk of broader inflation effects had become more pronounced as the initial oil shock persisted and new shocks emerged. It said persistent fuel, administered-price and food shocks could become embedded in expectations and wages.
2. Rate outlook
South Africa’s headline inflation was 4.4% in August. The bank said it expects inflation to reach its 3% target in the fourth quarter of 2027, and that its Monetary Policy Committee raised rates by a cumulative 50 basis points between April and October, with the last hike in September. Its final rate-setting meeting is in mid-November.
