Editorial | Tighten your belt, the ride is getting rougher

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Without adequate, focused and dedicated policy shifts from the governing party to realise the country’s potential, the catastrophic unemployment rate will continue to grow. Photo: Supplied
Without adequate, focused and dedicated policy shifts from the governing party to realise the country’s potential, the catastrophic unemployment rate will continue to grow. Photo: Supplied

VOICES


Core inflation figures released this week paint a dire picture of an economy in a deepening crisis. Coming in at 5%, moving to the upper end of the SA Reserve Bank’s 3% to 6% target range, consumer price inflation signals a clear prospect of a looming rise in interest rates to stem the increase.

This, in turn, will put more pressure on cash-strapped consumers to meet not only their debt obligations, but also daily living expenses.

The main contributors to the rise in inflation are the most basic of necessities. Food was up 6.6%, transport costs posted a 10.1% rise, while housing and utilities added 4%. None of this is good news and things are expected to get worse.

READ: Consumers feel the pinch as inflation hits expected 5% mark

Core among the drivers is the rising cost of fuel. With a hefty price spike expected at the end of this month (consumers will be expected to pay more than R19 a litre for petrol and R17 a litre for diesel) the trickle-down effect will lead to the inevitable increase in the cost of consumables.

To add fuel to the already burning economic fire, the International Monetary Fund’s projected growth for this year is 5%, coming off a dire contraction of -7% last year as the Covid-19 pandemic all but brought the economy to a standstill.

As consumers, there is little direct action to take

That may be a good figure if it was expected to be sustained for the next few years. In fact, it would be most welcome. This is not so.

The forecast for next year is a moribund 2.2%.

Without adequate, focused and dedicated policy shifts from the governing party to realise the country’s potential, the catastrophic unemployment rate will continue to grow, the tax base (from which the fiscus derives its spending) will continue to shrink and the country will be on a firm path to economic failure – a future too dire to contemplate.

As consumers, there is little direct action to take.

The decision-makers and the private sector – already sitting on a trillion-rand cash pile – must step up investment and push a decidedly pro-growth agenda. The opposite is too dark to imagine.


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