Wernardt Toerien, News24 User
As economists hint at another fuel price increase next month and the possibility of another interest rate hike, I am baffled that the ordinary citizen can still afford day to day living.
No doubt people like Dawie Roodt and Mike Schussler could provide me with the insight I need to understand the reasoning behind the SARB's monetary decisions, but let me share the following: Real "inflation" experienced by the consumer is nowhere near 10%.
It is much more than this, and basing salary increases on this figure is ludicrous. To my knowledge, the statistical figure called "CPIX" represents the average increase of a "basket of goods" that is supposed to be representative of the basics needed for the average household. In stark contrast, the increase I experience when I walk in to Pick 'n Pay or fill up at a petrol station, is in Rand terms, and is an absolute increase, not an average.
Being convinced that StatsSA and all the economists are much smarter than I am and are wise in their use of CPIX as the be all and end all indicator, I ignored my nagging suspicion that my personal inflation was far beyond 10%. Ignoring it, however, is no longer possible.
Basket of goods
Having tabulated the real Rand values of my basic expenses since January 2007 (just over a year ago), I have added the real Rand value increase up to a total and worked out what percentage of my original expenses bill this amounts to. The fact is that this shows that my total "expense bill" has increased by 30% since January 2007, and I am sure many other people can agree that they are experiencing similar figures.
Much of this is attributable to the effect of compound interest. A 4% increase does not equal a net 4% increase in monthly costs, but closer to a 25% real net increase. What I'd like to know then, is why the SARB and all these high-paid economists can sit idly by and chastise this elusive "middle class" that is allegedly spending so much credit on luxury items.
Could it be that these people are forced to slowly dip deeper into their available credit to carry their basic expenses while they run on a monthly deficit because they can cut costs no further?
Whilst hapless consumers are being rapped over the knuckles for having too much demand for goods (how dare these peasants want three meals a day? How dare they need to buy food?) by fat-salaried SARB officials, companies are lamenting their shrinking profit margins because consumers aren't buying as much as they used to.
Tighten your belts
This decline in profits is then used to justify not giving middle class workers 10% increases since companies claim they can't stay afloat if they were to do so. If I am not mistaken, rich people won't stop buying luxury goods when interest rates increase, because they have a truckload of money and little debt anyway.
So what "demand" exactly is Tito trying to curb? The demand for food and transport? Besides killing or starving the population deliberately, there's no way to reduce the demand for basic goods.
In the same breath, these economists then smugly attribute the inflation to rising international fuel and food prices, which combine to increase the domestic price of basic foods and transport.
Through all this, demand has decreased, if anything, as people are increasingly unable to afford things. And yet, we're still being told to spend less, save more and "take your medicine".
When will this madness end?
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Disclaimer: All articles and letters published on MyNews24 have been independently written by members of News24's community. The views of users published on News24 are therefore their own and do not necessarily represent the views of News24. News24 editors also reserve the right to edit or delete any and all comments received.