/ 6 December 2007

Inflation expectations tick up slightly

After a substantial increase during the third quarter, inflation expectations only ticked up slightly during the fourth quarter, according to the latest BER Inflation Expectation Survey.

CPIX inflation expectations are now expected to average 6% (previously 5,9%) during 2007, 5,9% (5,8%) during 2008 and 5,6% (unchanged) during 2009, the Bureau for Economic Research (BER) at the University of Stellenbosch said on Thursday.

Of the three social groups, analysts increased their expectations by the largest margin since the previous survey, namely by 0,2, 0,3 and 0,1 percentage points in respect of 2007, 2008 and 2009 respectively.

Trade-union representatives increased their expectations by a meagre 0,1 percentage points across all forecast years.

In contrast, business people increased their expectations slightly in respect of 2007, made no change regarding 2008 and lowered them for 2009.

Average headline CPI inflation expectations increased by a larger margin compared with CPIX inflation expectations since the previous survey. Headline inflation is expected to average 6,2% (previously 6%) during 2007, 6,1% (5,8%) during 2008 and 5,6% (5,5%) during 2009.

Household inflation expectations remained unchanged at 5,7%. — I-Net Bridge