In the fourth quarter of 2025, the average inflation expectations of the three professional groups surveyed by research organisation the Bureau for Economic Research (BER) subsided significantly.

Average inflation expectations dropped by about 0.5 of a percentage point for 2026 and 2027, as well as the five years to 2030.

Respondents now expect headline inflation to be 3.8% next year and 3.7% thereafter, which is a record low, the BER points out.

However, actual reported headline inflation moved sideways to about 3.5% in the fourth quarter survey, compared with the third-quarter survey, the BER says.

Finance Minister Enoch Godongwana had announced a new inflation target of 3%, down from a midpoint target of 4.5% previously, during the Medium Term Budget Policy Statement on November 12.

Among the professional groups, business people and trade union officials adjusted their long-run forecasts, for two and five years ahead, down by about 0.5 of a percentage point, while analysts did so by only 0.3 of a percentage point, although this group started from a lower-level expectation.

Analysts expect the lowest inflation two years from now, at 3.4%, while business people anticipate it to stabilise at about 4%. In the middle, trade unions foresee inflation of 3.8% in 2027, the BER notes.

While no group expects inflation to stabilise at the new 3% target in the long run, the broad-based downward shift is remarkable, it adds.

Meanwhile, household inflation expectations resumed its downward trend in the fourth quarter, after a brief pause in the third quarter, with one-year expectations at 5.3%, down from 5.5% previously.

This is now the lowest in four years, after reaching a recent peak of 8.1% in the second quarter of 2023, the BER says.

However, in contrast to their lower inflation outlook, during the fourth quarter, the professional groups did not revise their forecast of wage growth down. This group anticipates salaries to rise by 4.7% next year, which is almost the same as the 4.8% they expected in the third quarter.

Separately, in the fourth quarter, the survey respondents expected GDP growth of 1.3% in 2026, which is very similar to the 1.2% they foresaw in the third quarter, the research institute notes.