Repo rates increase

The South African Reserve Bank Governor Lesetja Kganyago announced to South Africans that the repo rate has increased to 6.25 per cent.

The monetary policy committee hiked interest rates by 25 basis points and this took the prime-lending rate to 9.75 per cent. Economists warned consumers to slow down on how they use their credit even though the increase was expected after the US dollar strengthened over the past few weeks.

Kganyago said the main reasons for the increase were the worsening drought conditions, food price increases and adjustments in electricity bill tariffs. Debt management expert at Debt Safe Wikus Oliver said that residents will have to reduce their reliance on credit.

“Although the rate hike was expected, the timing is bad. Retail outlets in the country are dependent on boost in sales over the festive season and the announcement by the SARB governor might cause sales to decrease in comparison to previous years,” Oliver said.

Due to the increasing financial strain and rising living costs, the rate hike will negatively impact the residential housing market.

Oliver advised consumers to be careful of price changes and take it into consideration when compiling their budgets and projections for next year. “Look at your spending habits, especially with the approaching festive season and financial responsibilities in the new year,” he said.

He also advised consumers to set up a monthly budget to stick to.

“Good planning is key and if you teach yourself and your family to do financial management and update your budget regularly, you will have an amount left over to put into an additional account where you can save your money for times when you need it,” Oliver concluded.

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