What a shocker! South Africa’s CPIX rate went into double digits for the first time since 2003, with a shock rise to 10.1% in March from 9.4% in February. It is now almost certain that the Reserve Bank will hike interest rates again in June in order to try halt the inflation which seems to galloping away into the sunset. One wonders how the Central Bank feels now seeing inflation at 10.1% after they have been trying to keep inflation between 3 - 6%. It seems like a long way away now to get the inflation down from double digits to the 6% mark. This is the 12th month running that the CPIX has been outside the banks target range.

It is really no surprise that the inflation has gone up but most of us did not expect it to have gone up by this much. Prior to the announcement today a Reuters poll forecast CPIX would rise to 9,7% year-on-year. If one looks closely at it, the main driver behind this huge increase in inflation must be the rising prices of food and fuel. And it looks like this is only the beginning of more torrid times ahead. If Eskom get the go ahead to increase the electricity tariffs by their proposed 60% instead of the 14.2% they had been granted then inflation will certainly continue to go up. Some suggest that inflation could get as high as 11.4% if Eskom get the 60% increase.

Another interest hike would be bad news for the man on the street. There is surely no way one can afford to save now with the ever rising rates of inflation and interest rates. We should not forget that although we are going through these hard times in South Africa right now, the world market in general is also going through a rather bad patch and we are just getting caught up amongst all of it.

Gone are the days when one could walk into a supermarket with R100 and come out with quiet a number of groceries. Today if you are to walk into a supermarket with R100 you would be very lucky to even request to get a plastic bag as what you buy will not be that much!

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