JOHANNESBURG - Expectations for inflation in South Africa in 2026 have dropped ‍sharply since ‍the finance minister announced a lower 3% inflation ​target, a fourth quarter survey of business people, trade union ⁠officials and analysts showed on Friday. The survey is commissioned by ⁠the central bank ‌and guides its thinking on the appropriate level of interest rates.

The average forecast was ⁠for inflation of 3.8% next year and 3.7% in 2027, down from 4.2% in both years previously.

The survey was conducted between November 17 and ⁠December 4. Finance Minister Enoch ​Godongwana announced the lower inflation target on November 12 after months of ‍lobbying by the central bank, which argued the previous target range ​of 3%-6% was making the economy uncompetitive.

Analysts gave the lowest inflation forecasts in the survey, of 3.5% in 2026 and 3.4% in 2027.

Business people expect inflation of 3.9% in 2026 and 4.0% in 2027, while trade union officials expect inflation of 3.9% in 2026 and 3.8% in 2027.

The South African Reserve Bank's next interest rate announcement ⁠is scheduled for January 29. At its ‌last policy announcement on November 20 it reduced its key lending rate by 25 basis points, ‌easing concerns the ⁠new inflation target would prevent it from cutting rates.