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.
What the SARB research reveals is that these prices have escalated significantly beyond their costs over the decade. At Eskom, this is the price of State Capture (although the utility company says its prices are still low and that municipalities are to blame).
At local government level, these costs reveal the likely underfunding (and overstaffing) of the third tier of government. Councils are loading paying consumers with extremely high costs.
This chart should offer some relief to both the economy and the reader. It shows that...