SOWETAN | The risk of high cost of living
The fast-rising cost of staple food such as maize meal is likely to push millions of South Africans further into poverty.
According to Pietermaritzburg Economic Justice and Dignity Group, the price of a bag of 30kg maize meal – a staple food for many households – has risen by 25% in the last 12 months. The World Bank estimates that 13.8-million South Africans are already experiencing food poverty.
The increasing costs of goods have undoubtedly had the most severe impact on the economic challenges facing businesses and households in SA today. These include rising inflation, which has been the trigger of persistent interest rates hikes.
Last week, the Reserve Bank increased interest rate to 8.25% from 7.75% which means many people are paying more to service their debts and on their home loans. The hike brought the interest rate to its highest level since 2009.
The effect of this will see the cost of rental, for example, likely increase over time. But the prospects of our situation improving are further worsened by the persistent electricity blackouts that are pushing small businesses to the brink of collapse.
It means that South Africans will suffer the outrageous prices of necessities and enjoy a lesser quality of life for a prolonged period. The impact of last week’s interest rate hike is only beginning to be widely felt this week by many households as loan repayments are due.
Economists tell us that there is no silver lining to the economic problems that are dramatically increasing the number of people living in poverty.
Unemployment is already sky high, the economy is stagnant and workers’ wages have been depressed since Covid-19 hit. For the working class, the rising cost of everything comes alongside the fact that their salaries have not improved much for years. It means there is nothing left to tighten their belts on.
Add to this the fact that more and more people are now qualifying for the government’s social security net, which further burdens the public purse.
It is not a sustainable solution to the problem and left unattended will play right into the hands of those seeking to fuel the fires of unrest especially ahead of elections next year.