In August, the average cost of a household food basket cost consumers R5 124.34. Picture: Karen Sandison, African News Agency(ANA).
While the South African Reserve Bank (SARB) decided to keep the repurchase rate (repo rate) unchanged this past week, the country’s cost of living crisis continues.
SARB Governor Lesetja Kganyago announced the Monetary Policy Committee’s (MPC) decision on interest rates this past Thursday, keeping the repo rate at 8.25%, while the prime lending rate stays at 11.75%.
The rate remains elevated, with many analysts predicting that it could only be cut in 2024, which will bring continued pain to consumers in the country.
Despite having to contend with daily load shedding imposed by ailing state-owned power utility Eskom, economic woes are further compounded by escalated fuel prices and high levels of inflation.
All of the above creates a perfect storm for the average South African, who finds themselves having to shuffle their budgets every month to contend with the high prices.
In August, the average cost of a household food basket cost consumers R5 124.34.
This was according to data from the August 2023 Household Affordability Index, compiled by the Pietermaritzburg Economic Justice & Dignity Group (PMBEJD).
With it being Heritage Weekend, also known as ‘Braai Day’ in South Africa, many South Africans will be lighting up for a braai, but data from the Outlier showed that the average cost to host a braai for 10 people cost R1 500.
The amount was compiled according to Statistics South Africa’s CPI data, which showed that 10 years ago, you would pay 43% less to host the same braai, paying R1 044.
The items for the braai was made up of biltong, beef rump steak, beer, boerewors, ice cream, potatoes, chips, bread rolls and beer.
According to Frank Blackmore, the lead economist at KPMG, we could be seeing interest rates in the country staying the same for the remainder of this year.
He said, “We have seen a proper decrease in inflation rates, especially from this time last year, and although there is still a lot of uncertainty in the economy in terms of upward pressures on inflation, there is some moderation in that inflation, which has given room in order to keep rates constant at this point. I think we’ll see this wait-and-hold strategy for much of the rest of this year, with reductions in inflation and interest rates, more importantly, expected within the new year.”
Hayley Parry, Money Coach and Facilitator at 1Life’s Truth About Money, said, “Consumers are urged to remain cautious and frugal because the Reserve Bank and the governor, Lesetja Kganyago, said that there does still remain risks. The repo rate could rise by 25 basis points in November. This would be a good time to cut back on unnecessary spending, pay down any debt that you can, and make sure that you're putting money into your emergency fund every single month.’’
Kganyago cited concerns about the continued depreciation of the rand and the ongoing multiplicity of supply-shock pressures on inflation as the key drivers behind the decision on Thursday to keep the rate unchanged.
He said in spite of headline consumer inflation returning to below the upper end of the inflation target range in June, it was expected to rise somewhat in the coming months before sustainably reverting to the midpoint of the target range in 2025.
“It took a long time for inflation to come down, and when it was coming down, it was moving at 0.1 percentage point. It’s only in the middle of July where we saw significant moves of inflation downward,” Kganyago said.
“And as I had cautioned before, the arrival of one swallow does not mean that summer is here. You need to see a little bit more swallows in the sky, then you will know the summer is here,” he said.
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