Cost of living rises with new repo rate increase


By Ernest Mabuza

Fuel prices across the board are set to increase in February, says AA.

You will have to pay more to service your home loans, vehicle finance and credit as the Reserve Bank yesterday announced another increase in the interest rate.

Reserve Bank governor Lesetja Kganyago said that the repurchase rate had been increased by 25 basis points (a quarter of a percentage point) to 7.25% per year, with effect from yesterday.

The purchase rate is the rate at which the commercial banks are charged when they borrow money from the Reserve Bank. The banks then charge their customers more in order to cover this extra cost. “Three members of the monetary policy committee preferred the announced increase and two preferred a 50 basis points increase,” its government Lesetja Kganyago said.

CEO of Debt Rescue, Neil Roets, said the hike was bad news for consumers who are paying off debt on property, vehicles and credit cards.

“Consumers are hanging on by a thin thread, and there is no more room to maneuver.”

South Africans have yet to feel any relief on their pockets when shopping for food, while the rest of the world has been benefitting from decrease in the prices of food items, reflecting the effect of falling global prices and improved supply chains. With 81% of households battling to put enough food on the table, how much longer can people realistically hold out?” he said.

Kganyago said while the SA economy grew by a relatively strong 1.6% in the third quarter of 2022, the expansion was not broad-based.

“We forecast no growth in the fourth quarter. For the whole of last year, GDP growth of 2.% is expected up from 1.8%,” he said. He said for 2023, and as a result of extensive electricity blackouts and other logistical constraints, the bank now forecasts GDP growth of only 0.3%. Given the scale of load shedding, the bank estimates that it deducts as much as two percentage points from growth in 2023…”

Kganyago said the revised repurchase rate remained supportive of credit demand in the near term, while raising rates to levels more consistent with the current view of inflation and risks to it.

Meanwhile, fuel prices across the board are set to increase in February, said the Automobile association (AA). The latest data shows an increase of about 52c/l for 95 ULP petrol and about 57c/l for 93 ULP petrol and increases of between 22c/l and 33c/l for diesel. The price of illuminating paraffin will climb by about 38c/l.

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