South Africa: Inflation Expectations Ease Slightly in Q3, In Line with SARB QPM Model Forecast

The BER released its Q3 inflation expectations survey, showing a moderation in 2y expectations from 3.9% to 3.8% (GS: 4.05%; SARB QPM model: 3.8%), following a sharp increase in the Q2 reading. 5y expectations also eased slightly, from 4.1% to 4.0%. The survey period was from August 17-September 3, largely predating the recent increase in the oil price. The composition of the increase was mixed: analyst expectations remained unchanged at the 2y and 5y horizons, while trade union expectations fell sharply, more than offsetting a moderate increase in business expectations. Salary and wage expectations were unchanged at 4.8%. Cumulatively, 2y and 5y expectations have risen by around 25bp and 35bp, respectively, over the past two quarters, partly reversing the 1.1pp decline recorded in the prior year. From a monetary policy perspective, while the softer reading in Q3 is a welcome development, we do not think that it will have a bearing on the upcoming September MPC meeting, where we recent