South Africans Battle Rising Cost of Living as Repo Rate Rises

The South African Reserve Bank's (SARB) Monetary Policy Committee (MPC) has once again increased the repo rate by 50 basis points.

The move, announced by SARB Governor Lesetja Kganyago, will see the repo rate increase to 4,7% per year. The increase is effective from 20 May 2022. The bank's forecast of headline inflation for this year is revised higher to 5.9% (from 5.8%). The Governor said this was primarily due to the higher food and fuel prices.

"While food prices will stay high, fuel price inflation should ease in 2023, helping headline inflation to fall to 5.0%, despite slightly higher core inflation. Headline inflation of 4.7% is now expected in 2024," Kganyago said.

The announcement comes two months after a Committee of Ministers was established to assess the rising cost of living on South Africans in the wake of the Russia-Ukraine war.

"As a government, we are deeply concerned about the continued rise in prices, particularly arising from the conflict that is ensuing between Russia and Ukraine and we are aware that food prices are going to go up but not only for us, but for many other countries around the world ... Families across South Africa are already feeling the effects of rising prices in supermarkets and at the petrol pump, and many are worried about how they will continue to provide for their families and make ends meet. We are using all of the levers at our disposal as government to cushion South Africans from the effects of the rising cost of living," President Cyril Ramaphosa said at the time.

The rising cost of living was also detailed in a Consumer Price Index report by Statistics South Africa published in January 2022. In it, the statistics body found that the least proportion of South Africans' income was spent on health, communication and education. The most, however, was spent on housing, food and transport. Additionally, Stats SA found that the consumption of alcoholic beverages and tobacco had risen.