2026 South African Salary Increase Forecast: January Update
In early November 2025, we published our 2026 South African Salary Increase forecast, outlining the methodology used to project future inflation and to determine a real salary increase. At the time, our forecast indicated a 5.00% salary increase for 2026. The full article can be read by clicking here.
The objective of this article is to revisit our inflation forecast and assess whether any new developments should influence the 2026 salary increase forecast. Two key factors have emerged that have affected our inflation expectations:
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- South African Reserve Bank Governor Lesetja Kganyago recently announced a new inflation target of 3%, with a 1% tolerance band, replacing the previous target range of 3% to 6%. A lower target is one of the most powerful long‑term tools for reducing actual inflation. By anchoring expectations, it encourages more moderate wage‑setting and pricing behaviour, which helps to reduce underlying inflation pressures over time.
At Axiomatic, we believe an inflation environment stabilising around 3% is likely to become the new norm. - The rand has strengthened significantly, trading close to R16.00/USD, supported by the following factors:
- South African Reserve Bank Governor Lesetja Kganyago recently announced a new inflation target of 3%, with a 1% tolerance band, replacing the previous target range of 3% to 6%. A lower target is one of the most powerful long‑term tools for reducing actual inflation. By anchoring expectations, it encourages more moderate wage‑setting and pricing behaviour, which helps to reduce underlying inflation pressures over time.
- A weaker US dollar
- Record‑high commodity prices, including gold and platinum
- Credit rating upgrades by S&P and Fitch
- Lower domestic inflation
A stronger rand generally helps to reduce the cost of imported goods, easing inflationary pressure.
Given the two factors mentioned above, we have revised our inflation forecast for 2026 and 2027 to:
The scientific or mechanical methodology described in our November 2025 article would imply the following:
Our current SA Salary Increase forecast for 2026 is 4.50%.
Of course, this forecast excludes other quantitative factors such as union demands, your past compensation trends, and your company’s financial position. These must also be considered.
Over the coming months, Axiomatic will continue to refine our 2026 salary increase recommendation as new data emerges.
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