Though the South African Reserve Bank’s (SARB) probable decision on Thursday to keep rates unchanged is almost fully baked in, governor Lesetja Kganyago’s speech will still be the highlight of a week that will also see the release of February producer inflation and the latest quarterly consumer confidence index.
With the conflict in the Middle East now entering its fourth week and oil supply still strangled, looming inflationary pressures in the coming months leave the central bank little scope to implement the cut rates that had been anticipated at the start of the year.
Read: Economist scraps expectation of a March rate cut
“The longer this conflict goes on and the more damage inflicted, the worse the economic pain and the potential for lasting scars,” Investec economist Lara Hodes said.
“Indeed, the surge in energy prices and the consequences for inflation have been a key topic for [major] central banks.”
In the same way that consumer inflation came in quite benign at 3% year-on-year in February from 3.5% in January, so too should factory gate inflation numbers for February.
“PPI [producer price index] is forecast to be flat on the month, translating to 1.8% year-on-year in February, following January’s 2.2% year-on-year lift. Specifically, petrol and diesel prices decreased in February by 65c/l and 50c/l, respectively, edging inflation lower during the month,” Hodes said.
Stats SA will release the February producer inflation print on Thursday morning, hours before the central bank announces its decision on rates.
In the coming months, starting from April, manufacturers will have to contend with sharply higher fuel costs that they will inevitably pass on to consumers.
“Apart from the fuel price rises driven by international oil prices, there must now be added the adjustments to the fuel and Road Accident Fund levies and the carbon tax, as well as the Eskom tariff increases,” said Raymond Parsons, an economics professor at the North West University Business School.
The Road Accident Fund levy is a tax included in the price of petrol and diesel to fund compensation for road accident victims, while the carbon tax is levied on greenhouse gas emissions to encourage companies to reduce pollution.
“The convergence of these factors on April 1 creates the prospect of a concentrated cost shock for consumers and business,” Parsons said.
On Tuesday, the consumer confidence index jointly produced by First National Bank and the Bureau for Economic Research (BER) at Stellenbosch University will show the latest measure of households’ willingness to spend money in the first quarter of 2026.
After a year marked by cautious spending and economic uncertainty, the index climbed to its highest point for 2025 in the fourth quarter, coming in at -9 vs -13 in the third quarter. Sentiment was, however, still below the long-term average of -1 and lagged the 2024 festive season reading of -6.
The fieldwork of the first quarter 2026 survey was completed before the initial attacks on Iran by the US and Israel, which set off the chaos on the oil market.
“Indeed, spillovers from the Iran war could hurt consumer sentiment going forward, the first direct implication being a diminished likelihood of an interest rate cut [this week],” the BER’s Lisette IJssel de Schepper said.
Also on Tuesday, the SARB will release the January leading business cycle indicator, a composite index that signals the future direction of the economy. It combines several forward-looking variables that tend to move before the broader economy.
The index fell by 1% in December 2025, partly as decreases in five of seven components outweighed increases in South Africa’s US dollar-denominated export commodity price index.
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