Cape Town – The South African Federation of Trade Unions SAFTU is urging the South African Reserve Bank (SARB) to lower interest rates after inflation dropped to a three-year low.
With the current interest rate at a 15-year high, SAFTU argues that the SARB no longer has justification to maintain high rates now that inflation is within the target range, EWN reported.
“In its speech, the MPC argues that it is keeping the rates up because of high inflation. Based on the sentiment and expectations of inflation, the SARB anchors its policy rates. Now that inflation has consistently been well within the target range of 3 to 6%, the SARB has no justification to strangulate the economy by keeping the interest rates high,” the report quoted SAFTU’s Trevor Shaku as saying.
The central bank’s monetary policy committee will meet in September to discuss policy rates.
On Wednesday official data showed that South Africa fell to its lowest level in three years in July.
Annual consumer price #inflation declined to a 3-year low of 4,6% in July from 5,1% in June.
Listen here for more: https://t.co/AfXUESg84w #StatsSA #CPI pic.twitter.com/ZuA2cNBm7x
— Stats SA (@StatsSA) August 21, 2024
Annual consumer price inflation reached 4.6 percent last month, down from 5.1 percent in June, national statistics agency StatsSA said in a statement.
“After holding steady for ten months in the 5–6% range, annual consumer price inflation slowed to… the lowest in three years since July 2021,” StatsSA said.
South Africa’s economy is battling high unemployment, poverty and sluggish growth.
The country’s jobless rate rose to a near record of 33.5 percent in the second quarter of 2024, StatsSA said earlier this month, AFP reported.
This means 8.4 million people were out of work, up from 5.2 million in 2014, it said.
While food inflation dipped even further from 4.6 percent in June to 4.5 percent in July, bread and cereal prices rose by 5.6 percent, up from 5.2 percent, the agency said.
Transport inflation softened to 4.2 percent in July from 5.5 percent in June, while fuel prices eased for a second consecutive month.
South Africa’s central bank has set a target for inflation of between three and six percent. It kept its main interest rate unchanged at 8.25 percent in July.
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Compiled by Betha Madhomu
