Rejane Woodroffe

Following the bread price-fixing scandal at the end of last year and the further recent increases by the large bread producers, there have been several calls for government to intervene in the market for bread. The argument against government intervention is that it distorts the market allocation of goods and services. When a good is in short supply, buyers bid up the price.

Last year saw a return to market volatility levels previously experienced in the recovery years of the 1990s’ dotcom bust. Markets are always volatile when there is uncertainty and there is much uncertainty right now — led by developments in the United States and European economies.

Although I work as an economist and portfolio manager in the finance sector, I live in a remote rural area where my husband has, together with the local community, built a backpackers’ lodge. This is in the most remote village in the poorest district in South Africa (according to Statistics SA), writes Rejane Woodroffe.

The latest inflation figures are higher than expected and breach the Reserve Bank’s target range of 3% to 6% for the second consecutive month. The main culprits of this inflationary pressure are oil and food prices, both of which are influenced directly by the rand- dollar exchange rate, writes Rejane Woodroffe.

After the inflation target was breached, the Reserve Bank was widely seen as justified in increasing interest rates early in June for the fifth time in a year. The question is less whether it should have done so, but whether we have chosen the correct inflation target.

The government imbizos (meetings) held in April were heavily criticised. While they are meant to be an opportunity for government to engage with the broader community, only a limited number of people are able to make it to the venues, there is limited time for discussion and issues are often focused on the area of expertise of the government official that is being hosted.

Inequality matters. It is often thought that only absolute poverty is important and that if all members of society have a minimum standard of living, the relative distribution of wealth is of no consequence. However, inequalities in income, wealth and opportunity have been found to lead to political instability.