Data published yesterday showed the SARB’s leading indicator increased to 113.6 points in July from 112.8 points (revised) in June. From a year-on-year perspective, the leading indicator increased for the fourth consecutive month by +4.0% y/y compared to June’s revised reading of +2.8% y/y. The SARB’s positive leading indicator print (both the rising index and positive year-on-year growth rate) proves to be a good signal for improved business conditions in South Africa. Increased consumer and business confidence and the ongoing suspension of load-shedding should bring more positive news in the coming month.
However, a risk to this positive outlook has arisen in the form of an Eskom application to the National Energy Regulator (NERSA) to raise electricity prices by 36% in the 2026 financial year. The utility’s current business model is faltering and showing signs of further decline. Load-shedding and frequent tariff hikes have prompted many of its top customers, both households and businesses, to shift to solar energy solutions, reducing reliance on Eskom’s grid. Additionally, Eskom faces the challenge of investing in transmission infrastructure, resolving municipal billing issues, and encouraging private sector involvement at competitive rates to develop a sustainable business model. While it remains uncertain if Eskom will secure such a substantial tariff increase, strong opposition from civil society is almost guaranteed, given the ongoing cost-of-living crisis
In the meantime, August PPI data, which headlines a local data card that also includes Q2 nonfarm payrolls, should still reflect disinflation on the supply side of the economy. Producer price outcomes are closely watched as a leading view on the direction of consumer prices. Producer price inflation slowed to 4.2% y/y in July from 4.6% y/y in June, driven by disinflation in coke & petroleum products and slower food inflation.