Eskom has been granted a 31.3% tariff increase by the National Energy Regulator of SA(Nersa). The hike will come into effect on 1 July 2009. Eskom had wanted a 34% increase but they have only been allowed to increase tariffs by 31.3% which is still a substantial amount. With the current state of the South Africa economy, this hike is not going to go down well with consumers. This increase will affect every consumer no matter who you are. But the consumer, as hard as it will be, will have to bare with Eskom as they needed this increase in tariffs. Eskom have been trying since January last year to get a hike. They need to increase the electricity infrastructure in the country to meet the increasing demand of electricity.

Get set for a hike in the price of petrol! The department of minerals and energy has revised the price of Wednesday’s petrol increase from 16c to 17c a litre. They have given no reason for this change. The decrease in diesel prices has also been revised. Diesel prices will decrease by 11.5c a litre and not 12.9c as stated on Friday, while 0.005% diesel will decline by 12.5 cents instead of 13.9 cents. Wholesale paraffin still decreases by nine cents and illuminating paraffin by 12c. Petrol in Gauteng will now cost 752c a litre from 735c before and 738c on April 1, and it is now 727c at the coast from 710c before.

South Africa’s new president, Jacob Zuma announced his new cabinet yesterday (Sunday) and there were a few surprises. One big question was if Trevor Manuel would remain as the minister of finance but it was not meant to be. Zuma has decided to go with Pravin Gordhan as the new minister of finance in South Africa. Gordhan headed the South African Revenue Service (SARS), SA’s tax authority. Under his leadership, SARS received great admiration for steadily raising income.

Gordhan’s appointment signals the end of Trevor Manuel’s 13 year reign as the minister of finance, making him the world’s longest-serving finance minister. Under Manuel, the South African economy did well as investors approved of the tight monetary and fiscal policies he kept in place.

But Manuel will not be totally out of the picture, he will still remain part of the South Africa government. Manuel will take up a role to head a powerful new planning body in the South Africa government. It will be interesting to see how the markets and investors react to the appointment of Gordhan now that their ‘darling’ Manuel is no longer in the top finance position. There should not be much reaction as Gordhan is expected to do well in his new position. And with Manuel still being part of the picture, we do not expect much changes in the economic policies.

Some good news going into the long weekend. The South African Reserve Bank’s monetary policy committee (MPC) has cut the key repo rate by 100 basis points. This brings the rate down to 8.5%, with the prime lending rate dropping to 12% from 13%, with effect from May 4. The repo rate is the rate at which the central bank lends to other banks, while the prime lending rate is the benchmark rate at which banks lend to customers. Since December 2008, interest rates have come down by a total of 350 basis points.

Data released today (29 April 2009) shows that South Africa’s targeted consumer inflation slowed slightly to 8.5% year-on-year in March from 8.6% in February. Analysts had predicted the rate to come down as low as 8.4% but they were not too far off. It is expected that the consumer price index (CPI) should come down to the central banks target of between thee and six percent by October this year. Headline CPI inflation stood at 1.3% on a monthly basis in March compared to 1.2% in February.

All eyes will now be on the central bank tomorrow when they make a decision on interest rates. Most are expecting interest rates to go down by 100 basis points tomorrow but we could only see a 50 basis point drop.

The rand reached a five and a half month high yesterday (Thursday) against the greenback this on the back of positive equity markets across the world following the news from the G20 summit that they have agreed to a deal making available more than $1 trillion in additional funds for leading international financial institutions, and laid the groundwork for a recovery of the global economy. The news from the G20 sent global equity markets soaring into positive territory. In South Africa, the JSE All Share index closed 3.19% in the positive whilst the rand was trading at 9.1350 against the dollar at 17:35, about 2.3% firmer than its previous New York close of 9.3505 on Wednesday. It touched 9.1102 earlier, its firmest level since October 15, according to Reuters data. Could this just be a sign that the world economy is starting to recover due to the G20 summit? Watch this space.

Another cheer for people in South Africa today! The South African Reserve Bank’s (Sarb’s) monetary policy committee (MPC) has cut the key repo rate by 100 basis points, bringing it down to 9.5%, with the prime lending rate dropping to 13%. This rate cut takes the cumulative cut since December 2008 to 250 basis points. Many economists had predicted this 100 basis point cut today and they expect another 100 basis point cut in April.

Some of you may wonder why these drops are occurring so regularly when in the past the MPC did not meet as often. The committee announced on March 18 that it would be changing meeting dates for the rest of 2009, with the committee meeting every month, except for July.

Reserve Bank governor Tito Mboweni said that the decision to cut rates was based on an improved medium-term outlook for inflation and the volatile global environment.