Wage settlements during the first half of this year have come in above inflation1, further squeezing margins of firms and raising the prospect of more entrenched wage inflation. The SARB’s Monetary Policy Committee (MPC) has moved to normalise rates, raising the repo rate by a cumulative 200 basis points since November 2021.
The hiking cycle began gradually with a 25 basis point adjustment at the November MPC meeting, but has since accelerated to include a 50 basis point increase in May, and a 75 basis point increase in July, as inflationary pressures intensified.