Electricity hikes could push inflation rate up by 0.75 percentage point | Fin24
 
In partnership with
  • Electric Car Tax

    Electric vehicles in SA are being taxed like luxury cars, which has reduced their popularity.

  • New Premises

    KPMG says it's on a journey of renewal as it opens its new Cape Town office.

  • Fin24’s newsletter

    Sign up to receive Fin24's top news in your inbox every morning.

Loading...

Electricity hikes could push inflation rate up by 0.75 percentage point

Mar 13 2019 12:57
Paul Vecchiatto, Bloomberg

South Africa’s electricity tariff increases could push the inflation rate up by 0.75 percentage point, Reserve Bank Deputy Governor Kuben Naidoo said.

The nation’s energy regulator said last week Eskom can raise electricity prices by 9.4% from April 1, taking the total increase to 13.8%. That’s almost 50% more than the assumption the central bank used in its latest projections for 2019, which forecast inflation will stay below 5% this year.

The Reserve Bank increased its key interest rate for the first time in more than two years in November, even as the economy had just come through a recession and hasn’t expanded at more than 2% annually since 2013.

It kept borrowing costs on hold in January and trimmed its projection for policy tightening as it lowered its inflation forecast.

While the central bank doesn’t position itself as being in a hiking or softening cycle, “it is no secret that the US is now in a softer interest-rate cycle and this will lessen pressure on the rand,” Naidoo said Wednesday at a conference in Cape Town.

Inflation slowed to a 10-month low of 4% in January.

NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

Do you think government can solve the Eskom crisis?

Previous results · Suggest a vote

Loading...