SOUTH Africans can expect to spend more of their income on their car and home loans in a year from now, if a prediction by the Industrial Development Corporation's chief economist Lumkile Mondi becomes true.
Mondi's comment is based on the inflation figures that Statistics SA released yesterday that showed the Consumer Price Index rose to 5.6% in October from 5.5% in September.
This is close to breaching the Reserve Bank's target range of between 3% and 6%. If the inflation touches on 6% or above, this could give the Reserve Bank ammunition to raise the rates.
Mondi says the biggest threats to inflation include the weakening currency, continuing current account deficit, high oil prices and the budget deficit.
"Due to these factors, we expect that by the third quarter of next year the Reserve Bank will have to raise interest rates," he says.
He says the current account deficit, a result of SA importing more than it exports, would remain in a negative territory due to the European financial crisis.
Mondi says the budget deficit would be driven by government's eagerness to show that it has delivered prior to the 2014 national elections.
"Government's expenditure will be high due to the coming elections," says Mondi.
The Stats SA figures also show the cost of living in North West has increased the most.
"The provinces with an annual inflation rate lower than or equal to headline inflation were Free State (5.5%), Gauteng (5.5%), Western Cape (5.4%) and Eastern Cape (5.4%)," says the report.
"The provinces with an annual inflation rate higher than headline inflation were North West (6.5%), Mpumalanga (6.2%), Limpopo (6.2%), KwaZulu-Natal (5.9%) and Northern Cape (5.7%)."
Standard Bank chief economist Goollam Ballim says it is usual for prices of goods and services in places further away from commercial centres to be slightly higher due to transportation costs.
He adds that it is worrying that the country is facing the festive season with rising inflationfigures.
"It is possible that inflation will accelerate to 2013 due to high energy, food and transportation costs," he says, adding that he hoped "interest rates will not rise next year". - sibanyonim@sowetan.co.za
Bleak economic outlook
SOUTH Africans can expect to spend more of their income on their car and home loans in a year from now, if a prediction by the Industrial Development Corporation's chief economist Lumkile Mondi becomes true.
Mondi's comment is based on the inflation figures that Statistics SA released yesterday that showed the Consumer Price Index rose to 5.6% in October from 5.5% in September.
This is close to breaching the Reserve Bank's target range of between 3% and 6%. If the inflation touches on 6% or above, this could give the Reserve Bank ammunition to raise the rates.
Mondi says the biggest threats to inflation include the weakening currency, continuing current account deficit, high oil prices and the budget deficit.
"Due to these factors, we expect that by the third quarter of next year the Reserve Bank will have to raise interest rates," he says.
He says the current account deficit, a result of SA importing more than it exports, would remain in a negative territory due to the European financial crisis.
Mondi says the budget deficit would be driven by government's eagerness to show that it has delivered prior to the 2014 national elections.
"Government's expenditure will be high due to the coming elections," says Mondi.
The Stats SA figures also show the cost of living in North West has increased the most.
"The provinces with an annual inflation rate lower than or equal to headline inflation were Free State (5.5%), Gauteng (5.5%), Western Cape (5.4%) and Eastern Cape (5.4%)," says the report.
"The provinces with an annual inflation rate higher than headline inflation were North West (6.5%), Mpumalanga (6.2%), Limpopo (6.2%), KwaZulu-Natal (5.9%) and Northern Cape (5.7%)."
Standard Bank chief economist Goollam Ballim says it is usual for prices of goods and services in places further away from commercial centres to be slightly higher due to transportation costs.
He adds that it is worrying that the country is facing the festive season with rising inflationfigures.
"It is possible that inflation will accelerate to 2013 due to high energy, food and transportation costs," he says, adding that he hoped "interest rates will not rise next year". - sibanyonim@sowetan.co.za
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