The continued rise in inflation is impacting everyone, including students, who are now compelled to adjust their spending around the increased prices.
As the country’s inflation rate rocketed to a 13-year high, reaching 7,8% for July 2022, an economist from Stellenbosch University says South Africa’s political situation needs to “stabilize” in order to reduce the economic burdens faced by its citizens.
Monique Reid, a macroeconomist from Stellenbosch University, says “Stable politics with a proper focus on reducing corruption, stable electricity and quality, stable education” could improve the economic standing of the country.
Statistics SA released inflation numbers for July 2022 last week, which show an increase of four basis points. This means prices now, on average, are 7,8% higher than prices in July 2021. Reid says that rising inflation causes a devaluation of money, meaning you can buy less and less for the current value of your money.
This rise is attributed to the ongoing war between Russia and Ukraine, which began in February 2022, and the easing of covid-19 pandemic restrictions.
The easing of restrictions has caused a large increase in the demand for goods, but the supply of these goods has not changed. Therefore, prices rise as there is a limited supply of sought-after goods.
The food and fuel prices have impacted greatly on inflation. The above graph shows that fuel prices have risen at a rate above the inflation percentage.
The graph below shows the Consumer Price Index (CPI), measures the monthly change of the price to buy a ‘basket of goods’, which consists of 393 items. CPI also increased above inflation, which, together with fuel prices and other goods has contributed to the 7,8% increase in inflation over the last year.
Students have had to reduce their luxury spending. Justine Kester, a fourth-year medicine student, says that she no longer buys clothes nor take-away meals as often as she used to.
Shreyen Reddy, a first-year game design student, says he is looking to carpool with friends to save money on fuel as students come into Wits every day. Reddy says he is also “cutting back on things [he wants]”.
To combat inflation, the South African Reserve Bank (SARB) has increased the repo rate, the interest rate at which it lends to commercial banks, to 5,5%. However, inflation will not decrease immediately.
“If they [SARB] wait too long or don’t increase rates enough, then it could take longer,” says Reid, “The SARB has to do what has to be done and not bow to political pressure.”
FEATURED IMAGE: Bidvest wants big bucks for Vila. Photo: File
- Wits Vuvuzela, Quality education is key to solving youth unemployment, August 2022
- Wits Vuvuzela, Steep fuel price increases squeeze student budgets, May 2022
- Wits Vuvuzela, Fuel hike hits hard on the poor, October 2018