By 
Economy is more a balancing game, a game that usually hits hard on the pockets of the ordinary. Though the economy has experience some growth in the recent quarter, inflation shot up moving further away from the targeted 3%.
The economy of South Africa showed some growth, mainly driven by household consumption last year. According to the South African Reserve Bank (SARB), the country experienced growth of more than 3% last year compared to the 1.3% overall economy estimate, however, while these are welcomed news, affordability remains a serious worry as inflation shot up in the recent quarter.
According to the SARB Governor Lesetja Kganyago, inflation last year was 3.2%, close to SARB’s 3% objective. He says inflation was a bit higher towards the end of the year, mainly because of temporary factors. The December print came in at 3.6%. A serious concern as it moves towards 4%; he however affirmed that SARB expects that this was the peak, and that inflation will slow from here.
“Indeed, our near-term inflation forecast has fallen, with the rand stronger and a lower oil price assumption. We are, however, keeping an eye on food inflation, especially meat prices, which are being affected by a serious outbreak of foot and mouth disease. We are also concerned about electricity prices, given that NERSA’s price correction may rise from R54 billion to R76 billion.
More positively, inflation expectations have fallen, with the latest survey showing longer-term expectations at record lows. We look forward to expectations declining further, as South Africans experience on-going lower inflation and learn more about the new target,” said Governor Kganyago.
“In turn, lower expectations will be important for getting inflation to settle at 3%. Currently, we are benefitting from low goods price inflation, supported by factors like the stronger rand. Goods inflation is at 3%, and core goods is at 1.2%. By contrast, services inflation is still over 4%. It is desirable to have services inflation moving closer to 3%, as low inflation becomes the new normal for South Africa,” he continued.
