Build One South Africa (Bosa) leader Mmusi Maimane speaks about the cost of living in South Africa, suggesting that the Reserve Bank should have reduced interest rates to relieve struggling households.
This follows the announcement that the South African Reserve Bank has kept the repo rate at 8.25%.
Reserve Bank Governor Lesetja Kganyago said global monetary risks to the inflation outlook are assessed to the upside.
Kganyago further explained that at a global level, headline inflation continues to moderate, but food price inflation remains high, oil markets have tightened, and core inflation looks sticky.
Maimane said that the central bank’s Monetary Policy Committee (MPC) should have reduced the interest rate by at least 25 basis points to provide some respite to struggling households, given that inflation has largely stabilised at 4.8% year-on-year.
In a video shared on X, Maimane says it is now time to decrease interest rates as the economy is stagnant in South Africa.
“South Africans are using 65% of their net income to service debt, and 76% of South Africans run out of money before the end of the month. Families are losing homes, cars and kids are being kicked out of school.
“We cannot continue with austerity in a no-growth economy,” he said.
He shared three urgent interventions that he feels the government can implement to alleviate some of the financial strain:
- Scrapping the numerous transport taxes – called fuel levies – which make up a third of the total cost of a litre of petrol, a decision that can have a direct impact on lowering citizens’ transport costs as well as an indirect impact on lowering the cost of food.
- Expanding the list of zero-rated food items that are untaxed. With VAT likely to increase, this is a vital intervention for poor households that spend a disproportionate amount of income on food.
- Freezing the 31.4% electricity price increase scheduled for the medium term. Maimane feels this is an out-of-touch and unaffordable increase for already squeezed households.