The South African Reserve Bank (SARB) has published a special bulletin of economic research finding that the 2026 fuel price shock has generated less widespread inflation pressures than the 2022 episode, despite larger increases in oil and fuel prices. Price increases nevertheless exceed the pace consistent with the 3% inflation target. Prolonged fuel cost pressures could become embedded in inflation expectations and wages, generating more persistent inflation. Across 389 consumer price items excluding petrol and diesel, weighted prices rose 2.4% in the six months following February 2026, compared with 4.3% over the equivalent period in 2022. Lower food inflation and a relatively stable rand helped contain broader price pressures. Services prices, however, increased 2.9%, exceeding the 2.7% rise in 2022, as transport fares increased alongside domestic inflation pressures not directly linked to fuel. These comparisons are descriptive rather than causal estimates of fuel price transmission. Model simulations show that a sustained 30% fuel price increase could lift firms’ inflation expectations two years ahead by as much as 0.65 percentage points, compared with 0.15 percentage points for a temporary shock. The sustained response dissipates only after eight quarters. Market pricing indicates larger effects on inflation expectations at five years than at 10 years, without a persistent deterioration in the longer term outlook. Separate estimates find that wage expectations respond immediately to oil shocks while actual wage growth adjusts with a lag, making expectations an earlier indicator of emerging wage pressures. The research supports monitoring expectations and wage settlements alongside actual wages, and suggests that sustained fuel pressures may require tighter monetary policy for longer.

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