Consumers will have to dig deeper into their pockets, as data released this week revealed that the consumer inflation rate reached new heights in August. This can be attributed to Eskom raising electricity prices last month and the continuous increases of food prices globally.
Consumers will have to dig deeper into their pockets, as data released this week revealed that the consumer inflation rate reached new heights in August. This can be attributed to Eskom raising electricity prices last month and the continuous increases of food prices globally.
According to Statistics South Africa (Stats SA), the Consumer Price Index (CPI) rose to 13.7% for the month of August. This means that compared to last year August, consumer prices have increased on average by 13.7%.
The CPI, excluding mortgage rate changes (CPIX), which the South African Reserve Bank uses to set interest rates, is at a record 13.6%. This is the 17th consecutive month that the CPIX rate has been above the inflation target of 3 to 6%. The Reserve Bank’s monetary policy committee meets next month to decide whether to adjust interest rates.
The bank has increased its benchmark interest rate 10 times since 2005 as inflation accelerated. However, according to Rhodes Investec Professor in Money and Finance, Pierre Faure, a further interest rate increase would have devastating effects on people whose income value has already been diminished by inflation.
Local prices
Like the rest of the country, Grahamstown has felt the effects of soaring inflation, particularly within the food market. With food inflation running at 18.8%, restaurants and supermarkets have had to increase their prices.
Grahamstown shop owners are also starting to feel the pinch as inflation eats into people’s disposable income. “Inflation affects everyone and my profit has decreased since the beginning of the year,” said Shaan Corrie, owner of Duke’s Surfwear and Elixir clothing stores.
“Luckily my target market is students and I find students have more available funds since they do not have bonds to pay off, although people are more wary to buy and my stock prices have increased considerably.”
Third year Rhodes student Mvuzo Ponono says luxuries are a thing of the past: “I live on a student allowance and inflation is affecting me badly, I’m now forced to become a vegetarian because I can’t afford meat.”
Street vendor Ntombento Magoxo struggles to make ends meet. “What are we poor people supposed to do when all the money we make is not even enough for food?” Magoxo asked. “I use candles as I can’t afford electricity most times.”
Adrian Sligcher, an oppidan student at Rhodes University said, “I live in a five man digs and we now budget on R20 per person for supper each day,” Sligcher said. “Last year we managed with R15 per person.”
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Rhodes Investec Professor of Finance and Money
