As inflation tamed down in the past month, it has paved the way for the South African Reserve Bank to pause its interest rate hiking cycle.
This is a welcome reprieve for consumers battling the cost of living crisis in the country.
June saw the release of the consumer price index (CPI) data for May, which showed that it had slowed to 6.3% from 6.8% in April.
At the start of the month, motorists also cheered the fuel price decreases that were announced, and looking ahead to July, there may be further good news to come.
Early data suggests that there could be a small cut in petrol prices for next month, while diesel prices could see an increase.
The Central Energy Fund said that current data indicates a 6 cents decrease for Petrol 95 and 93 could be lowered by 15 cents a litre, with diesel increasing between 10 and 15 cents per litre, depending on the grade.
The fuel price changes will be published on 5 July 2023.
At a time of consumers battling the cost of living crisis in the country, with high-interest rates, see-sawing fuel prices month on month, and the economy being hit hard by Eskom’s load shedding, the reprieve will be welcomed.
Brina Biggs, senior manager at 1Life, told Business Report that a drop in the fuel prices, having some stable electricity in June, and the knock-on effect on consumers is hopefully the start of further decreases in inflation across the board.
Biggs said, “May has seen the lowest inflation rate since April 2022, and more importantly, food inflation eased to 11.8% from 13.9% in April, which was similar to a level last seen 14 years ago. The good news is that this is the first time in a while that your rand is not being stretched further. This will hopefully appease the Reserve Bank’s Monetary Policy Committee, and we see no increases in interest rates at their next meeting.”
She further said that the bank had already hiked the repo rate by 475 basis points to try and cool inflation.
Biggs further said, “Economists are still predicting that we will only see the interest rate being cut early next year. If you are already struggling financially, continue sticking to your budget and do not take on any additional debt.”
Hayley Parry, money coach and facilitator at 1Life’s Truth About Money, said that this could be the first time since November 2021 that the Reserve Bank could abstain from hiking the interest rate.
Parry said, “The CPI slowed faster than expected in May. As consumers, we can be cautiously optimistic that this may give SARB the space it needs to end the tightening cycle. This will be much needed relief for consumers as it has been really hard for them. Anybody repaying any form of debt saw the costs rise greatly from November 2021.
“That had put a lot of pressure on households. It has contributed to the cost of living crisis for many consumers. We saw the number of people default on their home loan repayments increase significantly. Hopefully, this is going to give us some relief, if nothing else, just a pause in the increases, and hopefully it signals the end of this interest rate increase cycle.”
BUSINESS REPORT