Cape Town - SA Reserve Bank governor Lesetja Kganyago on Thursday announced that the repo rate will remain at 7%, but he is still concerned about persistent high inflation in the country.
Announcing the South African Reserve Bank's (Sarb’s) rate decision at its headquarters in Pretoria, Kganyago said food price inflation in August accelerated to a recent high of 11.6% and he expects it to peak at 12.3% in the fourth quarter on the back of the persistent drought. This is, however, slightly lower than in previous forecasts.
DebtBusters CEO Ian Wason said in a statement that current economic conditions - including high food prices - coupled with political instability have fuelled the increase in numbers of over-indebted consumers in the country.
“This year has been full of surprises,” said Wason, “from the president paying back the money to the Finance Minister (Pravin Gordhan) being investigated by the Hawks".
Political uncertainty in the country has also led to uncertainty, which has in recent months caused the rand to lose significant value against the dollar. This in turn gives rise to an increase in basic living conditions.
"What is most concerning for the large banks is that the increase in enquiries from consumers with vehicle finance or home loans has been over 35% year-o- year,” Wason said.
South Africans remain under financial pressure, despite the repo rate not changing, he added.
"The National Credit Regulator’s crackdown on reckless lenders, new amendments to the National Credit Act and the decrease in the cap of unsecured interest rates have led to credit providers reducing the amount of credit granted. "
This, in turn, has left consumers with little option but to continue borrowing and taking out expensive debt, Wason said.
Read Fin24's top stories trending on Twitter: