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6 October 2026
The shock has become increasingly visible in core inflation, while the prospects of El Niño and fertiliser constraints add to food-price risk.
Major central banks initially responded differently because of varying exposure, initial conditions and domestic inflation persistence, but their policy responses have since become more synchronised around a tightening bias.
In South Africa, headline inflation increased from 3.2% in the first quarter of this year to 4.5% in the second and is projected to remain elevated above 5% until the second quarter of 2027, before easing back to target from the fourth quarter.
The MPC raised the policy rate by a cumulative 50 basis points to 7.25% over the review period (April−October 2026).
Policy must guard against the risk that persistent fuel, administered price and food shocks become embedded in expectations and wages thereby undermining the credibility of the target.
Turning to economic activity, growth is forecast to average 1.2% in 2026, from 1.4% in April, rising gradually towards 2% by 2029 as structural reforms progress.
