South African Reserve Bank research points to wage expectations as an early signal of oil shock pressures

The South African Reserve Bank has published a research note finding that wage expectations respond to oil price shocks sooner than actual wage growth in South Africa. Survey expectations may therefore provide an early signal of emerging wage and inflation pressures, with trade union expectations showing more persistent responses than those of firms and financial analysts. Using quarterly data from the first quarter of 2000 through the third quarter of 2025, the analysis models a temporary 40% increase in Brent crude oil prices. Wage expectations rise immediately across all three respondent groups, while actual wage growth responds significantly only after one quarter, increasing by about 1.5 percentage points after two quarters. This delay is consistent with collective bargaining arrangements and wage agreements covering several years, which may postpone adjustments until renegotiation or the application of clauses linked to inflation. Financial analysts show the strongest immediate increase in expectations for wage growth in the current year. Trade unions’ expectations for wage growth a year ahead display greater persistence, including positive responses five and six quarters after the shock. Higher wage expectations are also associated with stronger subsequent wage growth, although the findings do not establish a causal relationship. The note recommends assessing survey expectations alongside actual wage growth, wage settlements and broader inflation and labor market conditions, rather than waiting for wage data alone to reveal mounting pressures.