South African Reserve Bank governor Lesetja Kganyago and the bank’s monetary policy committee have elected to hold rates in a tight vote last Thursday to keep the repo rate at 8.25%, with the prime lending rate at 11.75%.
Kganyago’s announcement was met with widespread relief.
Based on leaving borrowing costs unchanged, this resulted in double-digit increases in loan repayments in floating rate products such as home loans and vehicle finance, along with higher levels of growth in essential expenditure items such as groceries, education and healthcare.
CEO of Debt Rescue Neil Roets said: “It is concerning that our food retailers seem to have been hiking their grocery prices and not dropping them in line with inflation coming down, especially with two-thirds of the nation struggling to put enough food on the table to feed their families. Food is not a nice-to-have for households, it is an essential to keep people alive.”
The latest Essential Food Pricing Monitoring (EFPM) report shows that South African retailers are more profitable than their counterparts in other countries.
It is understood prices take much longer to come down despite rapid decline in inflation, as this has been noted in the prices of maize meal, cooking oil and bread.
Roets said that EFPM looked at recent pricing trends and margins at the producer and retail level and found that the inflation lag is very real.
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