By Lee-Yandra Paulsen
As consumer inflation slightly dropped last week, we want to understand what the month of May looked like by checking in with those tracking the Household Affordability Index report.
Pietermaritzburg Economic Justice & Dignity Group Programme Coordinator, Mervyn Abrahams, spoke to VOC Breakfast on Monday about these developments. “What we are seeing since April is a slight decline in inflationary pressures. For instance, the Consumer Price Index (CPI) has decreased from 5.3% to 5.2%, and food inflation has dropped from 4.9% to 4.4%, so there is about a half a percentage point drop in food price inflation.”
Abrahams highlighted that this situation presents both good and bad news. “The good news is that we are moving in the right direction, with the trajectory showing a downward trend in inflationary pressures. We expect this to continue, especially with food price inflation decreasing further once we start getting the winter crop, as the vegetable component of the basket is still extremely high.”
“The bad news is that the decline is so slow that most households won’t see the benefit. Even with lower inflation rates, many households still cannot afford a basic food basket.”
He expressed hope that when the Reserve Bank begins cutting interest rates, it will have a significant impact, making the reduced inflation more noticeable to consumers.
“The longer the repo rate stays at its present level, the more pain it causes the South African consumer. With repo rates remaining high, we have seen a massive increase in consumer debt. The only way people can service this higher debt is through credit, which exacerbates the cost-of-living crisis and causes significant pain to the economy,” commented Abrahams.
VOC News
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