South Africa: There's Some Not-So-Bad News On the Inflation Front, but Growth Prospects Are Looking Pretty Dismal

analysis

The current Covid-19 situation, coupled with civil unrest, supply chain and transport problems, will negatively affect predicted growth rates. These factors will push down growth prospects for 2021, with less investment and many businesses closing down under current conditions.

Professor Daniel Meyer is a lecturer in the College of Business and Economics, University of Johannesburg.

In terms of the economy, inflation is one of the most important variables. Fast-rising inflation is a feared concept in macroeconomic terms. Inflation is defined as a decline in purchasing power, and a quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price of a basket of selected goods and services in an economy over a specific period. Generally, rising and high inflation is bad news for consumers due to the rising cost of living. High levels of inflation could also lead to a lower level of savings.

The inflation rate reached its highest level in the past three years in May 2021 of 5.2%, but declined to 4.9% in June 2021. But should we be concerned about rising inflation?

In South Africa, inflation is currently driven by cost-push inflation and not...

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