The falling Rand has a very dark side. After yesterday’s news that the country’s official inflation has now climbed above the SA Reserve Bank’s target range, we now understand why interest rates had to be hiked last week despite SA’s sluggish economic growth. The nation continues to pay for Nenegate.
Although few join the dots, it’s the poorest who are hit hardest by this sliding currency and the consequent higher inflation. Pietermaritzburg-based Pacsa’s food basket for January is up 9% in the past three months and over 14% in the year.
It is being driven there by price rises in imports like rice (12% in the last quarter) and drought affected staples samp (up 36% year on year) and maize meal (21% higher than January 2015).
Most pundits regard poor political leadership as the greatest threat to South Africa’s stability. They are missing a more pressing challenge. Arab Spring was sparked by higher food prices.
From Biznews community member Ian Jayes
"Oliver Cromwell said almost 400 years ago: “An empty stomach hath no law”