It is ingrained in the national consciousness that the only way to deal with inflation is for Tito Mboweni to use increasingly large clubs to clobber the consumer with higher and higher interest rates.
South Africa's targeted CPIX (consumer inflation less mortgage costs) rate quickened unexpectedly to a near five-and-a-half year high of 10,4% year-on-year in April from 10,1% in March, official data showed on Wednesday. Mike Schussler, economist at T-Sec, said: "That seals the case for interest-rate hikes. Inflation continues to shock."
South Africa's economic growth rate slowed to 2,1% in the first quarter of 2008 on a seasonally adjusted and annualised basis, official data showed on Tuesday, citing a sharp drop in mining due to a power crisis. Statistics South Africa said Q1 GDP slowed from 5,3% in the fourth quarter of 2007.
The increase in the retail price of petrol by 55 cents per litre will result in a "period of anguish" for South African households, an economist said on Wednesday. Absa economist Chris Hart said the increase would cause food prices to rise and fuel inflation. Hart said the country was expecting a hike in electricity prices as well as an increase in the rate of taxes.
Salaries should increase on average by about 11,8% in 2008, an employment report released on Thursday shows. "Higher inflation makes for high salary increases," said economist Mike Schussler, who compiled the report for the United Association of South Africa trade union.
