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By Dylan Bettencourt
- Petrol prices in Gauteng are set to jump by R5.20 a litre in April, the biggest month-on-month increase ever recorded.
- A new survey shows South African households now expect inflation to reach 5.4%, well above the Reserve Bank’s 3% target.
South Africans hoping for cheaper home loans will have to wait longer. The Middle East war has made it almost certain the South African Reserve Bank (SARB) will not cut interest rates at its meeting this week.
Before the conflict between Israel, the US and Iran broke out, economists expected a small cut of 25 basis points. That would have brought the repo rate down from its current 6.75%.
February’s inflation dropped to 3%, which would normally have helped the case for a cut, BusinessDay reported.
But petrol prices are now set to jump by R5.20 a litre for 95-grade petrol in Gauteng in April. That is a 26% increase and the biggest month-on-month jump ever recorded.
“The inflation risks stemming from the conflict mean the volatile environment is not conducive to an interest rate cut,” said Momentum Investments economists Sanisha Packirisamy and Tshiamo Masike.
They said how long the war lasts will determine whether the pain is short-lived or whether the SARB needs to act more aggressively to keep prices under control.
A survey by the Bureau for Economic Research (BER) shows South African households now expect inflation to hit 5.4%, up from 5.3%. That is well above the SARB’s 3% target.
The US Federal Reserve also voted 11-1 to keep its rate unchanged at 3.5% to 3.75%.
Nedbank’s economics unit said the escalating war could push inflation above the 4% upper limit, even if only temporarily.
With rates almost certain to stay put this week, some economists say they could remain unchanged for the rest of 2026. A few are even raising the possibility of a rate increase before the year is out.
Pictured above: The South African Reserve Bank Governor, Lesetja Kganyago.
Image source: @SAReserveBank
