The effects of the war in the middle East are filtering through to everyday inflation.
South Africa’s headline year-on-year inflation surged to 4.0% in April, a sharp rise from the 3.1% recorded in March, and also exceeded industry forecasts as record fuel price hikes started filtering through the economy.
However, it appears that the worst is still to come, with several economists predicting that inflation will edge even higher in May, with many forecasts clustered around the mid-4% range.
At the upper end of the forecasts is FNB’s projection that headline inflation will rise to 4.6% year-on-year (y/y) in May. This is based on its updated inflation model using April’s inflation data released on Wednesday. This also aligns with Nedbank’s prediction that CPI inflation will peak at around 4.6% in the second quarter of 2026.
Next month’s inflationary pressure will once again be driven by higher fuel prices, which will continue to filter through to transport costs. However, an oversupply of some food products is likely to keep near-term food inflation contained, FNB said.
