It seems like there is no stopping the ever rising rate of inflation in South Africa. At this rate one wonders even if the likes of Usain Bolt would even be able to catch up with the rate the way it is going. The increase in South Africa’s consumer price index excluding mortgage rate changes (CPIX) for metro and other areas, which is used by the South African Reserve Bank (SARB) for its inflation target, was up 13.0% year-on-year (y/y) in July from 11.6% y/y in June. This is the sixteenth month in a row that the CPIX has been outside the central bank’s target of having inflation being between 3 - 6%. Before the release of todays statistics, a survey carried out by I-Net Bridge had forecasted inflation to come in at 12.9%.

The question most of us will be asking now is, “Where to from here?” If the inflation rate continues to go up at this rate, the central bank is going to be forced to increase interest rates again. We were lucky the last time the MPC met and they decided not to change interest rates, but next time around we may not be so fortunate. It seems like unimaginable that the rate will drop down from 13% to the target of below 6%. If only the saying of ‘the higher you go, the harder you fall’ could hold with the rate of inflation, we would be happy. But as high as the rate is going, do not expect it to come down as fast. In that famous words of Tito Mboweni, “It is time to tighten up your belts!”

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