Professional services firm PwC has published an updated financial forecast for South Africa on the back of Russia’s invasion of Ukraine and global inflationary pressures.
Inflation risks have escalated over the past month, given global commodity market developments. Global wheat prices, for example, have increased to a 14-year high. On the energy front, South Africans already paid R1.46/litre more for petrol this month, with the risk of a similar increase in April.from a mean of 4.6% in 2020.
“If under a hypothetical, but not impossible, stress scenario, food inflation climbs to 10% y-o-y and transport inflation rises to 20% y-o-y for a period of four to six months, the headline inflation number could be 1.5 percentage points higher than the baseline during H2 2022 and heading into 2023,” the firm said.
The SARB’s forward guidance currently suggests a year-end repo rate of 5.06% compared to a projection in January of 4.91%.
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