South Africa’s trade conditions are showing tentative signs of recovery after being battered by the surge in fuel prices earlier this year, but rising crude oil prices could put renewed pressure on businesses in the months ahead.
The South African Chamber of Commerce and Industry (SACCI) said its Trade Conditions Index improved from a low of 35 in June to 42 in August, signalling that trading conditions had stabilised somewhat after the disruption caused by the Middle East conflict and its impact on global energy prices.
However, the recovery remains fragile.
SACCI said crude oil prices climbed from about $73 ((R1188) a barrel at the end of June to around $90 (R1464) by the end of August — an increase of about 23%. The chamber warned that the increase could result in more cautious trading conditions, alter spending patterns and put pressure on businesses’ input costs and profitability.
“Trade conditions improved marginally in July and August 2026 and appear to have stabilized but remain in negative terrain,” SACCI said.
The latest survey showed improvements in supplier deliveries and inventories, while new orders and sales volumes also increased slightly. Sales prices and input costs were largely unchanged, suggesting that some of the inflationary pressure experienced earlier in the year may have eased.
The improvement is also reflected in broader economic data.
Consumer inflation slowed to 4.3% in July, while producer inflation eased to 3.1%. Private-sector credit to households increased by 5% year on year, while credit to non-households rose by about 9%. Retail trade volumes, however, remained subdued, increasing by only 1.6% year on year, while merchandise export volumes weakened in the short term.
SACCI said expectations for trading conditions over the next six months continued to strengthen, moving into positive territory.
The chamber attributed some of the improved outlook to more stable fuel prices and lower inflation, but it cautioned that stronger expectations would need to be supported by actual improvements in economic activity.
“The more stable fuel price and lower inflation played a role in the positive expectations,” SACCI said. “It is imperative that real economic performance supports the expected improved trade conditions.”
The employment outlook has also improved.
Despite difficult trading conditions, 33% of survey respondents reported employing staff in August. Businesses are also signalling greater willingness to hire, with the employment expectations index rising to 64 in August from 40 in April, when crude oil prices were at their peak.
Economist Dr Simphiwe Madikizela, a senior lecturer at the University of South Africa’s School of Graduate Business and Leadership, said the improvement was encouraging but should not be mistaken for a complete recovery.
“I would describe it as an improvement in conditions rather than a full recovery, because the underlying trading environment remains relatively constrained,” Madikizela said.
He said the Middle East conflict had delivered a significant shock to the South African economy, particularly through higher oil prices, which raised costs throughout the supply chain.
SACCI reported that crude oil prices had reached about $119 a barrel in April, while 75% of respondents to its April survey reported higher input costs. By the end of June, crude oil had fallen to around $72 a barrel, helping to improve business and trade expectations.
Madikizela said lower energy and transport costs could gradually feed through to logistics, manufacturing, agriculture and retail, potentially easing pressure on business margins and supporting consumer spending.
But he warned that the gap between businesses’ expectations and their current trading conditions remained significant.
“SACCI's June Trade Conditions Index was still subdued at 35, while the gap between actual trade conditions and expectations remained quite wide,” he said.
“This tells us that businesses were becoming more optimistic about the future, but the improvement had not yet fully translated into stronger economic activity.”
Independent economist Ulrich Joubert also welcomed the improvement but warned that fuel prices could once again become a drag on trading conditions.
“The Middle East tensions caused petrol and diesel prices to increase earlier in the year and this negatively impacted trade conditions. Then we had stability which had improved trade conditions,” Joubert said.
“However, with September petrol price increase and the expected big increase in October this could impact trade conditions in the future.”
yogashen.pillay@nationalmg.co.za