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Inflation 'cancels' grant increases before implemented

Mar 03 2016 21:15
Terry Bell

Cape Town - The ink on Finance Minister Pravin Gordhan’s Budget 2016 hardly had time to dry before food price inflation wholly undermined the increases he gave to social grants.  

At the time of the budget, critical economists such as Dick Forslund pointed out that increases in everything from pensions to child grants lagged behind the official level of inflation.

But now the authoritative Pietermaritzeburg Agency for Social Development (Pacsa) has noted that, by the end of February, every social grant increase - only due in April - had been eroded.

Between January and February alone, the price of a basket of basic food items increased from R1 797.04 to R1 879.24. The Pacsa report points out that a 25kg bag of the staple food for poor families - maize meal - increased by R21 (12%) in that time.

According to official consumer price index (CPI) figures, food price inflation rose by 6.9%, while the increase in pensions was 6.3% and child grants rose by 6.1%. The child grant rises to R350 a month next month. However, Pacsa notes that, at current prices, it would have cost R546.80 to provide an adequate, balance diet for a young child.

READ: Spending on social grants goes up

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