It’s a busy week on SA’s economic calendar, with critical data on inflation, mining and retail set to provide insights into the economy’s trajectory.
Markets will also be keeping a close eye on global developments, including Donald Trump’s inauguration as US president and the World Economic Forum’s (WEF) annual meeting in Davos.
Stats SA is set to release December’s inflation data on Wednesday, marking the final consumer price index (CPI) report under the current basket of goods.
Economists project headline inflation to rise to 3.1%-3.3%, reflecting a slight month-on-month increase from November’s 2.9%.
The Bureau for Economic Research (BER) expects this to bring the full-year CPI average to 4.4%, marginally higher than November’s figure.
Independent economist Elize Kruger cautioned a weaker rand and rising Brent crude prices have cast a shadow over the inflation outlook.
“My 2025 CPI forecast has crept up to 4.5%, aligning with the midpoint of the SA Reserve Bank’s target band but notably higher than its November projection of 4%,” she said.
Investec economist Lara Hodes downplayed the modest 17c/l petrol price hike in December but expects some upward pressure from food costs, which rose 6% month on month globally.
Nedbank economists highlighted the fading base effects in food categories such as milk, eggs and cheese, which surged late in 2023 due to severe load-shedding and a poultry shortage caused by a bird flu outbreak.
“Inflation in these items is likely to edge higher to 1.9% from 1.6%,” they noted.
Services sectors, including housing and utilities, domestic worker wages and vehicle insurance — categories typically surveyed in December — are expected to contribute further to the CPI uptick.
However, core inflation, which excludes volatile food and energy prices, is likely to ease slightly to 3.6% from 3.7%, as consumer spending remains subdued.
SARS has reminded individual and trust provisional taxpayers that Monday marks the final day for filing annual returns for the 2024 tax year.
This includes the period between March 1, 2023, and February 29, 2024.
— SARS announcement
November’s mining and retail trade data is set for release on Tuesday and Wednesday, respectively.
Mining production began the fourth quarter on shaky ground, contracting 3% in October. However, the BER remains cautiously optimistic, projecting flat growth in the fourth quarter that could still contribute positively to GDP.
Nedbank economists forecast year-on-year growth of 1.6% in mining production, up from 1.4% in the previous month. “Growth is likely to be driven by improving global demand and the absence of load-shedding,” they said.
Retail activity, buoyed by Black Friday promotions, is expected to reflect a strong performance for November.
“While the seasonal adjustment and year-on-year growth rate should account for this annual event, anecdotal evidence suggests that 2024’s Black Friday saw particularly strong retail spend,” the BER noted.
Lower inflation and improved consumer confidence could further bolster growth. Nedbank forecasts a 2.2% rise in retail sales.
President Cyril Ramaphosa will address the WEF annual meeting in Davos, Switzerland, on Tuesday where discussions will focus on collaboration in the intelligent age.
Topics at the forum include economic recovery, climate challenges and technological advancements such as AI.
Meanwhile, markets are bracing for Trump’s inauguration on Monday. With his campaign promises ranging from trade tariffs to tax cuts, investors are eagerly awaiting signals on his economic policies.
“The Trump policies and US Treasury movements will dominate sentiment in the short term, with limited market activity expected until after his inauguration,” said Andre Cilliers, currency strategist at TreasuryONE.
Last week, Trump’s economic team signalled tariffs would be less extreme than promised during his campaign.
“Following the news reports, equity futures rose, followed by rising stock prices when markets opened. The US dollar weakened, and Treasury yields declined,” said Lisette IJssel de Schepper from the BER.
“The dollar was particularly strong before the news broke, trading at a two-year high against major currencies following a boost from the solid jobs data last Friday. Trump himself has not commented on this message and may, like he did last week, flip markets around by denying such an approach.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.