Inflation in Limpopo second highest in country – SARB
The price of food, housing and water play a vital role in the inflation rate in the province
POLOKWANE – The South African Reserve Bank (SARB) hosted a “Talk to the SARB” Forum in Polokwane on Tuesday, 8 October. Speakers at the forum included Fundi Tshazibana (deputy governor of SARB), Kalai Naidoo (Senior Bank Analyst from the prudential authority) and Koketso Mano, an associate economist from the research department, and they were on hand to provide information about banking, insurance as well as to explain how inflation affects unemployment and growth in Limpopo.
Mano shared that there is currently R3.2 trillion worth of goods and services being produced in the country, majority of which is from the services sector. The services sector accounts for 75 percent of the country’s GDP. She further highlighted the effects of unemployment on the country’s economy. “As it stands, there are 16.3 million people employed in the country and 6.6 million unemployed people. These figures show a rise in unemployment which translates to the economy not growing at a sufficient rate to absorb job seekers. We have more people entering the labour market, however, the amount of people who are being absorbed into the job market remains stagnant,” she explained.
Inflation has also been a bone of contention for the country. Mano explained that if bread in 2018 cost R12.95, and at an average inflation rate of 4.5 percent (the recommended midpoint), in 20 years time, the price of bread will be R31.00. “If we allow inflation to average 6 percent per annum, the price of bread will increase all the way to R42.00 in 20 years time.”
“High inflation quickly erodes how far R100 can get you financially, hence price stability is important and that’s the reason why inflation needs to be regulated. The average inflation in Limpopo is at 4.4 percent, ranking it second highest after the Western Cape. Drivers of this include food prices as well as housing inflation which are both higher than what we have in the rest of the country. The price of water also plays a role,” explained Mano.
Confidence by investors impacts greatly on the growth of the economy. “Businesses say they want to see how things will improve before they invest and jobs are more or less on hold. Some businesses are actually cutting down on jobs. All these have an impact on growth,” explained Tshazibana, the deputy governor.
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