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This report covers the key data releases domestically and internationally over the past week, as well as updates on crucial structural reform initiatives. It is a shortened version of the more comprehensive BER Weekly Review (Enhanced version), which includes a detailed discussion on the main economic events and developments over the past week, a summary of upcoming data (the week ahead) and the BER’s forecast for key economic indicators. The full Weekly is only available to BER Essential Insights subscribers (sign up here – it’s only R210/month) and BER Premium Insights clients.
Inflation in factory gate prices, as measured by the PPI, accelerated to 1.5% y-o-y in July, from 0.6% in June. The uptick was in line with expectations and marks the highest reading since August 2024. On a monthly basis, the PPI rose by 0.7%, compared to 0.2% in the previous month. The increase was mainly driven by an increase in food products, beverages and tobacco products.
The SARB’s leading business cycle indicator increased by 0.4% m-o-m in June, following two consecutive months of decline. The increase was driven by gains in three of the seven components, which outweighed the decline in the remaining four. The main contributors were a stronger six-month smooth growth rate in the real M1 money supply and a rise in the US-dollar export commodity price index.
Roy Havemann
SA has taken a major step in reforming its rail freight system by granting 11 private train operating companies (TOCs) access to Transnet’s network. This is the first time in decades that private players will run services on the state-owned infrastructure, following the National Rail Policy of 2022. Out of 25 applicants, the chosen operators met safety, technical, and financial requirements and will now negotiate access agreements with Transnet.
The operators will run services across 41 routes in six key freight corridors, including coal, manganese, iron ore, containers, and fuel. For example, the North Corridor will see six new operators moving coal and chrome, while two companies in the Cape Corridor will transport manganese to Saldanha Bay. Collectively, the TOCs are expected to add around 20 million tonnes of freight annually from 2026/27, helping government move towards its goal of 250 million tonnes by 2029.
The reform is designed to boost capacity, attract private investment, potentially up to R100 billion, and ease pressure on roads by shifting bulk commodities back to rail. Importantly, Transnet will retain ownership of the infrastructure, with contracts for private operators lasting between one and ten years. While the move has been welcomed as a step forward, critics warn that retaining Transnet’s operational monopoly could limit the scale of the reform’s impact. Find Vuyo Guma’s take on the matter in today’s Business Day, or on the BER website on Monday.
Eskom and the National Energy Regulator of South Africa (NERSA) reached an out-of-court settlement following Eskom’s judicial review of the Sixth Multi-Year Price Determination (MYPD6). NERSA acknowledged errors in depreciation and asset valuation that had underestimated Eskom’s allowable revenue. As a result, the regulator agreed that Eskom is entitled to an additional R54 billion across the MYPD6 period. The impact of this correction will be phased into tariff increases of approximately 8.8% per year for the 2026/27 and 2027/28 financial years, up from earlier projections of 5.4% and 6.2%. The settlement was finalised on July 30, 2025, and will be implemented without the usual public participation process due to the legal context of the agreement.
The Eskom–NERSA tariff settlement will put upward pressure on inflation over the medium term. Electricity tariffs feed directly into the CPI basket, where administered prices already make up a sizable share. The revised hikes of about 8.8% in 2026/27 and 2027/28 (instead of 5–6%) mean electricity will be one of the fastest-rising components of inflation. The BER’s baseline forecast already had higher increases pencilled in than those initially granted by NERSA, so we don’t have to make immediate adjustments to our electricity assumption.
That said, the broader impact comes through second-round effects: higher electricity costs raise operating expenses for businesses, particularly in energy-intensive sectors like mining, manufacturing, and retail. These costs are often passed on to consumers, amplifying inflationary pressures beyond the direct electricity component. For households, higher tariffs reduce disposable income, which can shift spending patterns.
In macro terms, the settlement could add 0.2–0.4%pts to headline inflation in the affected years, depending on how much of the cost is absorbed by businesses versus passed through. For the SARB, high administered price inflation is one of the key challenges in bringing down inflation to 3%, especially when tariff increases coincide with food or fuel price shocks.
Nomvelo Moima
According to the Bureau of Economic Analysis (BEA), the US economy grew at an annualised rate of 3.3% in 2025Q2, up from an initial estimate of a 3% expansion. This is a sharp rebound from the 0.5% contraction in 2025Q1. The revisions to GDP mainly reflect upward adjustments to consumer spending and investment. However, the robust GDP picture remains skewed by big swings in net exports between the first and second quarters.
The German GfK Consumer Climate Indicator declined to -23.6 for September, down from -21.7 in the previous month. Declining for a third straight month, consumer sentiment weakened on the back of a significant deterioration in income and economic expectations. Largely driven by growing concern about rising unemployment.
Contrary to consumers, the outlook amongst businesses in Germany appears to be less pessimistic. Germany’s ifo Business Climate Index edged up from 88.6 to 89 in August, surpassing market expectations and reaching a 15-month high. The brighter mood amongst businesses was underpinned by improved expectations for the coming months (91.6 in August, up from 90.7 in July). However, the assessment of current conditions ticked down to 86.4 in August from 86.5.
Editor: Lisette IJssel de Schepper
Tel: +27 (0)21 808 9777
Email: lisette@sun.ac.za
Please refer to the glossary on the BER website for explanations of technical terms.
Friday, 29 Aug 2025
