Source: Ferial Haffajee, Dauly Maverick, 21 October 2020, photo credit: Efogator.com
The sky-high cost of electricity, water, rates and taxes drives inflation and can stamp out green shoots of economic recovery, suggests research by the SA Reserve Bank.
In the past decade, electricity and water costs in South Africa have shot up so high that they are now the biggest inflation drivers, according to the SA Reserve Bank.
South Africa’s interest rates are at an all-time low and the stimulus this provides can boost demand. There is space to bring rates even further down to lower the costs of borrowing, but as this chart shows, administered prices (the term used to describe utility and other tariffs) are now so high that they can cause inflation.