JOHANNESBURG – High inflation and power cuts have been listed as still being two of the biggest economic hurdles facing all South Africans, with the South African Reserve Bank saying that both needed to be swiftly addressed.
In dealing with inflation, the Reserve Bank has moved to increase the repo rate to stop prices from increasing.
The monetary policy committee (MPC) has decided to increase the rate by 75 basis points to 7%, in step with other central banks around the world, which are also moving to deal with similar inflationary pressures.
Reserve Bank Governor Lesetja Kganyago said that high inflation continued to be a concern and the MPC was left with little choice.
“The level of the repurchase rate is now above the level prevailing before the start of the pandemic.”
The governor said that global pressure was still pushing prices up.
“Despite easing of global producer price and food inflation, Russia’s war on Ukraine continues with adverse effects on global prices generally.”
He said that while inflation was a problem, the country’s growth was also being hindered by power cuts, but the economy was growing.
“We now expect the South African economy to grow by 1.8% this year. Despite considerable volatility in monthly indicators, GDP growth of 0.4% is expected in the third quarter.”
But overall, he said that South Africans had been hit by a number of economic pressures and for those in debt, the rate hike is being seen as a major blow.