Latest price hikes to push inflation beyond 6%

APRIL 1, 2015

Local economists are warning that the latest price hikes will add inflationary pressure to the economy – and a further burden on consumers and businesses.

Petrol prices rose by R1.62 at midnight, bringing the price of 95 octane petrol inland up to R12. 83, while electricity for direct Eskom consumers  increased on Wednesday by almost 13%, with municipality power consumers due for a 14%  hike in July .

Chief Economist at Pan African Investments, Iraj Abedien, believes the new prices will push inflation beyond 6% by the end of the year.

This will force the south African Reserve Bank to start hiking interest rates. He said the new price increases from tax and expenditure is also not good for consumer confidence.

He told the SABC; “Administrated prices are going to increase the CPI and that will in a way set the motion of short term inflationary pressures on the cost and that will lead to the Reserve Bank having to re think its hanging of interest rates increase."

Meanwhile, Credit Guarantee Insurance economist Luke Doig says this will heavily impact on businesses and consumers.

“Petrol price picked up in April last year to about R14.39 to R10.31 in February this year, but already they have gone up by an accumulative 25% to the existing price that will come into effect tomorrow first of April.”

“R12.89 diesel similarly its fallen R13. 38 to below R10.26 in February and consumers are going to be hard pressed to cope with these cost increases."