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!”

Now that the Olympic games in China are over, the next major sporting event in the world will be the FIFA World Cup in 2010 to be held here in South Africa. All eyes will be on South Africa, not only in the build up to the event but also after the event. A lot of money and resources are being put into this world show piece event. Some have said, too much money is being spent by the government for an event that will only last one month. A question you hear being banded around a lot these days is, “What will happen after 2010?”

Jason Simpkins from Money Morning takes a look at the China economy during the Olympics games below. Maybe we can see how the Olympics affected China and see if the same will happen in 2010 in South Africa : Read the rest of this entry »

Today (Thursday 14 August), Reserve Bank governor, Tito Mboweni, announced that the Reserve Bank’s (SARB) Monetary Policy Committee (MPC) has decided to keep the repo rate at 12%. “The MPC has considered recent economic developments and the outlook for inflation and has concluded that, notwithstanding certain risks to future inflation outcomes, the current monetary policy stance is appropriate,” Mboweni said. This news comes as a huge relief to many who had feared that interest rates could go up again. But one should not be overly happy as the MPC will continue to monitor the situation and if need be, they will rise interest rates as they see fit. Read the rest of this entry »

We could be in for a huge petrol price drop in September. It is thought that the price of petrol could come down by as much as R1 a litre and R1.60 for diesel. That is if the world oil prices remain low and the rand remains strong. We will only know for certain come the 3rd of September as fuel prices come into effect on the first Wednesday of every month. Whilst most consumers will be happy if the prices go down by that much, fuel stations owners will not be too happy with this news.

Fuel station owners who bought fuel at the more expensive price will sell it at a loss as of the day of the change. On top of this, motorists will wait for the lower price before they fill up their vehicles. What this means is that, fuel stations could keep their supplies low until the Tuesday (2 September), or they might even allow supply to run out. Oil companies will then struggle on the Wednesday to meet the demand. Now if fuel stations do not want to stock up before the Tuesday that means there could be a potential shortage of fuel being sold by the fuel stations. Read the rest of this entry »

After having reached levels of around R7.20 to the US dollar in the last couple of weeks, the rand extended losses against the dollar to more than three percent on Friday (8 August), as the greenback staged a strong rally across the board. The local currency was trading at R7.74/$ at 17:00, 3.5% softer than its previous close in New York, and just off its weakest mark in a month of R7.7450 hit earlier in the session. And it is just not that Rand loosing strength against the greenback, this move is in line with other countries as the US dollar gains strength across the board. The rand has weakened almost 10% to the dollar since hitting a 6-month high of R7.1820 on Monday (4 August).

South Africa’s targeted inflation - the Consumer Price Index excluding interest rates on mortgage bonds (CPIX) has risen to a new five-year high of 11.6% year on year in June from 10.9% year on year in May, Statistics South Africa said today (30 July). The surge is attributed to rising international oil prices and soring food costs. The higher than expected figure could put pressure on the Reserve Bank to raise interest rates yet again next month. This is the fifteenth month running that CPIX has been above the 6% upper target limit set by the Central Bank. Read the rest of this entry »

It is no secret that we face an electricity crisis in South Africa. Eskom have just not been able to cope with the increase in demand of electricity due to the growing economy. The government and Eskom are trying to find a solution to the electricity crisis. There are suggestions that new power plants have to be built over the next couple of years and more coal will need to be secured inorder to power these plants. Funding for this expansion has not been easy as consumers seem to be the main contributors to the funding with electricity tariffs set to rise.

There have been calls by many to find alternative means of power to help increase the supply of electricity in South Africa. Many wonder why there has not been a major drive to start using more and more solar power. After all, we are in South Africa where we get a lot of sun shine through out the year. There are many countries in Europe using solar energy and they do not get as much sun shine as we do in South Africa. The cost of setting up the solar power infrastructure is relatively high but it would be a good long term investment. Read the rest of this entry »