Consumers should brace themselves for a higher cost of living in the months to come. There are more upside risks to inflation and it is believed inflation will edge towards the higher end of the target bracket.
Economist Isaac Matshego says rand weakness and a possible Eskom tariff pose significant risks to inflation.
Consumers’ disposable income is being eroded by the increasing cost of goods and services.
The weakening rand and higher oil prices have led to a rise in fuel prices this month. A litre of petrol cost R14. 97 cents following a 49 cents increase. The Value-Added Tax rate has gone up to 15 per cent.
There is also the possibility of an electricity tariff increase. National Energy Regulator of South Africa (Nersa) will in the next month announce its decision on Eskom’s application to claw back R67 billion.
If granted, it will push inflation higher. Matshego does not believe there will be further interest rate cuts in the foreseeable future.
Matshego says depending on the rand’s weakness levels and international oil prices, inflation will edge towards the upper end of the target bracket and possibly breach the 6 per cent level.
Click below for more on the story: