Tough times

2016-03-16 06:00

THE common sentiment expressed by the government is that consumers need to tighten their belts as the economy goes into a challenging patch.

In his Budget speech, the Finance minister highlighted a range of commodity price increases. As the target range of the government’s three to six percent inflation margin is exceeded, interest rates are going to rise to bring inflation under control.

The National Energy Regulator of South Africa has allowed Eskom to increase electricity tariffs by 9,4%, an above-inflation increase that is going to eat into the disposable income of consumers. As commodity prices begin to increase, workers are going to demand higher salaries, which will lead to decreased productivity as workers engage in industrial action.

The impact of the drought will compound rising prices. And the volatility of the rand has become a major talking point due to dubious decisions made by the president. The Hawks and Minister of Police Nathi Nhleko seem to be intensifying their bid to extract information about an alleged “rogue unit” that was in SARS. Consumers must brace themselves for further devaluation of the rand if the rift between Tom Moyane and Pravin Gordhan is left to simmer without constructive intervention soon.



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