Accelerating inflation spells disaster for the poor

Issued by Dr Dion George MP – DA Shadow Minister of Finance
24 Aug 2022 in News

Please find attached soundbite by Dr Dion George MP.

South Africa’s inflation rate has jumped to a shocking 13-year high.

Recorded at 7.8% in July, almost 2% above the upper limit of the central bank’s target range of between 3% and 6%, the increase is a reflection of a significantly deteriorated economic outlook.

In response to the crisis and the ineptitude of the ANC, the DA will soon launch a Cost-of-Living campaign that will lay out how the DA plans to alleviate pressure on households.

South Africa has recently experienced accelerated increases in food and fuel prices combined with rising core inflation, which is devastating to household consumption. Transport of goods and services posted an annual price increase of 25%, with fuel prices up 56.2% compared with July 2021.

South Africa has also seen an increase in wage related negotiations and strikes over the past few months. Civil society unions are challenging governments and industries over incremental wage increases. The danger now is that current ongoing above-inflation wage negotiations risk a further price spiral, which will wipe out the savings of South Africans.

Further complicating matters is South Africa’s now highly probable greylisting by the Financial Action Task Force (FATF) which will compound inflationary pressures as the largely unknown consequences unfold.

The country has not experienced such inflationary pressures since the 8% annual rate registered in May 2009, when the economy grappled with currency depreciation after the global financial crisis. This time the crisis lay at the feet of government, which has failed dismally to implement the necessary fiscal measures that would have mitigated the effect on consumers.

The ANC government clearly has no plan to address the ongoing crisis and has shown that it has no concept of the consequences of its economic policies that have effectively brought our economy to its knees and more South Africans deeper into poverty.