Chapter 1 – Macroeconomic market dynamics
South Africa entered 2026 with inflation well contained and economic conditions gradually improving. However, escalating tensions in the Middle East quickly altered the outlook, driving fuel and transport costs sharply higher and pushing headline inflation above the SARB’s target range. While food inflation provided some relief, broader price pressures became increasingly widespread across the economy. Absa Research expects headline inflation to remain elevated in the near term before moderating towards the end of 2027, although considerable uncertainty remains as geopolitical developments continue to shape the inflation outlook.
Headline inflation is expected to moderate towards the end of 2027.
Figure 1
Source: EconoStat, Stats SA, Absa Research, 2026
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