Click here for our March update.

Our original article describing a methodology by which to formulate a scientifically derived salary increase for 2019, recommended a 6.5% salary increase. Our subsequent January 2019 update revised this forecast down to 6.0%. This update examines the validity of this forecast given incoming information and the Budget.

Inflation continues to decline. In January 2019 inflation was recorded at 4.0% which was significantly lower than the 4.5% recorded in December 2018. Before one reads too much into the decline, one must consider that core inflation (which excludes food, alcoholic beverages, petrol and energy) remained unchanged at 4.4% for the two months. The driver of the fall in inflation was primarily attributable to lower fuel prices; the petrol price fell by R1.23 in January 2019.

Despite current inflation being slightly lower than anticipated, we continue to forecast that average inflation for 2019 will be 5.0% – with a low of 4.0% but quickly accelerating to 5.4% in the middle of the year.

Axiomatic Monthly Inflation graph


We remain wary of upside risks to inflation which may be caused by rand depreciation, higher international oil prices and the spectre of significantly higher electricity tariffs. The Minister of Finance stated in the recent budget that the National Treasury expected “…an annual adjustment of 10% in electricity prices in each of the next three years, effective from July 2019”.

In a welcome development, the Minister also announced that members of Parliament, provincial legislatures and executives at public entities would receive a 0.0% salary increase this year.

Growth remains anaemic and the Minister of Finance now agrees with our projection of 1.5% for 2019. Economic trading conditions remain tough and the raft of poor financial results are tangible proof that companies continue to find it difficult to pass on increases in input costs to consumers. Concomitantly, there is little chance that business affordability will permit a greater real increase than 1.0% this year.






We will however continue to revise our projections over the coming months to take account of incoming economic data. If you would like to receive these regular updates, please email us at so we can include you on our mailing list.