Home South African Tough year predicted for SA households amid soaring prices, interest rate hikes

Tough year predicted for SA households amid soaring prices, interest rate hikes

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Despite Statistics South Africa data showing that the consumer price index eased to 7.2% from 7.4% in December 2022 the SA Federation of Trade Unions expressed concern that inflation remained high above 7%.

Saftu general secretary Zwelinzima Vavi. Picture: Itumeleng English/Africa News Agency (ANA)

HOUSEHOLDS in South Africa should brace themselves for a tough year ahead, despite this week’s Statistics South Africa data showing that the consumer price index (CPI) eased to 7.2% from 7.4% in December 2022.

This is according to the SA Federation of Trade Unions (Saftu), which expressed concern that inflation remained high above 7%.

Safta said the data showed that union members and the working class at large had the most difficult December as prices of food were up 12.4%.

Saftu spokesperson Trevor Shaku said: “We see this index not only as a reflection of a tougher 2022, but also as an indicator of a tougher year ahead.”

The unions federation forecast that the looming interest rate hikes this year would worsen the living conditions of workers in terms of debt servicing and living costs.

“The SA Poultry Association has shown that South Africans are failing to even buy eggs.

“This is because the rising cost of living squeezes the income of workers, and workers are left with no option but to prioritise consumables and debt servicing,” the unions federation said in a media statement released on behalf of its general secretary, Zwelinzima Vavi.

According to the union, even though statistics showed inflation easing from 7.4% to 7.2%, food inflation increased by 0.4%.

“Concretely, this was proved by the Household Affordability Index, which has shown that the cost of household groceries increased by R17 from R4,835 in November to R4,853 in December 2022.

“The yearly increase was R577.24, taking the average cost of household grocery from R4,275 in December 2021. In the past five years, the costs of household groceries increased by R1,830,” Vavi said. The high cost of living was compounded by the increases in the price of fuel, “which has increased more than 70% at the peak last year, and is now still 40% up from what it was in March 2020”, he said.

Increased costs for electricity, transport and other household essentials and interest rate hikes placed the burden on the unemployed middle-income earning working people.

“Unfortunately, the December inflation statistics will give a further pretext for the SA Reserve Bank to hike interest rates,” he said.

The SA Reserve Bank and its army of commentators, all neo-liberal monetarists, were using the painful way of hiking interest rates to fight inflation, he said.

“Because of their belief that ‘inflation is everywhere and always a monetary phenomenon’, to fight inflation they always strive to reduce the money in the pockets of consumers, who are overwhelmingly working class people.

“This is done by making financial liabilities such as loans, bonds and credit facilities expensive through interest rate hikes. This method drains money out of people’s pockets.

“Simultaneously it pushes small businesses into bankruptcy, which in turn stimulates unemployment.

“Like the chair of the Federal Reserve, Jerome Powell, remarked last year, this is indeed a painful way to fight inflation.

“Nonetheless, because of their beliefs, they enthusiastically utilise it,” Vavi said.

Pretoria News

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