Results of the BER Inflation Expectation Survey – Fourth Quarter of 2008

CPIX inflation expectations regarding 2010 declined, because the expectations of the trade union officials declined from 8.5% to 7.7%. Analysts and business people held their expecta-tions unchanged at 5.9% and 7.7% respectively.

Of the three groups, only analysts anticipate CPIX inflation to be within the 3% to 6% target range by 2010.

Whereas headline CPI inflation expectations regarding 2008 increased further, those in re-spect of both 2009 and 2010 declined. A reduction in analysts’ and trade union officials’ ex-pectations reduced the 2009 and 2010 averages respectively.

Although household inflation expectations edged up by 0.1 percentage point to 9.1% during 08Q4 they remained well below the 9.5% registered during 08Q2. It is noteworthy that household inflation expectations declined during 08Q3 and remained at this lower level dur-ing 08Q4 despite the fact that actual inflation – as measured by Stats SA – continued to increase during 08Q3. The reduction in the petrol price may have sustained household inflation expectations at their lower level during 08Q4.

The latest results are discussed in more detail in a report that appears on BER's webpage at www.ber.ac.za.

The SA Reserve Bank commissioned the BER to conduct an inflation expectation survey. The fourth quarter survey of financial analysts, business executives and representatives of the trade union movement was conducted between 24 October and 24 November 2008 and the results computed on 25 November 2008. The fieldwork for the household survey was done between 13 and 30 October and the results processed on 25 November 2008.

Financial analysts, business people and representatives of the trade union movement: