The whole country was tense about the proposed electricity tariff hike that was proposed by Eskom but now Eskom have decided not to hit the consumers with a once off hike of over 50% but rather increase tariffs over a period of time. Consumers will still have to pay slightly more for electricity but they will not feel the hit once off.

This has come as a huge relief to many people, most notably for the Reserve Bank. A once off hike of over 50% would have forced inflation in South Africa to sky rocket. High inflation is bad news for the Reserve Bank who are trying to keep inflation between 3 – 6%. With a 50% electricity tariff hike it would have been almost impossible for inflation which is currently hovering around 10% to come back down to between 3 – 6%. But the pressure is still on for the Reserve Bank even after the news that Eskom will not go ahead with their hike. Oil prices continue to rise so to the price of food. Some predict that the Reserve Bank is going to increase interest rates again in South Africa in order to try curb the increasing inflation. Some are even predicting an increase of 100 basis points.

One now can only wonder why Eskom have opted not to increase tariffs by a high once of rate? Does this mean we will continue to have load shedding? How will Eskom finance their infrastructure expansion without generating money from increasing tariffs? Is the government going to put more money into Eskom rather than let the consumers finance Eskom’s expansion? There are many questions still on the table with very few answers. For now we can have the slight comfort that electricity prices will not sky rocket over night but sooner or later Eskom are going to get the prices they want.

Subscribe

Sign-up to receive the latest updates from TheRandToday.com direct to your mailbox

Loading ...