The Consumer Price Index (CPI) is a monthly measurement where the price of a range of consumer products are measured. The difference in the price of a good is its inflation.
In South Africa, inflation increased to a five-year high in December 2021, with South Africa’s consumer inflation increasing to 5.9%. This was an increase by 0.4 percentage points from the previous month. The last time inflation was measured this high was in March 2017.
Professor Bonke Dumisa believes that the high inflation rate can be attributed to the increase in fuel prices which accounted for more than 18% of the calculation. While motorists received some reprieve in January 2022, economists are expecting the price to increase again in February as the price of oil increases.
Increases to the petrol price saw motorists in Gauteng having to fork out more than R20 per litre. Fuel is an inflationary pressure and the price of fuel does impact the price of manufacturing as well the cost to transport goods.
Dumisa explained, ‘You find that the more the fuel prices increase, everything which we eat in South Africa is transported via the road and then that influences the end consumer prices that we pay at the supermarkets’.
He adds that many other things have contributed to the high inflation rate in the country. This includes the price of electricity. Eskom, SA’s power utility wants to introduce a 20.5% increase on electricity tariffs. This could further see the inflation rate rise.
Dumisa questions how South Africans will be able to afford electricity should the increases be implemented. This as many people lost income during the Covid-19 pandemic while those who retained jobs will not have received any increases.
He said, “When you factor in that 20.5%, how will many South Africans afford to pay for that increase? This will lead to more people stealing electricity and then when eskom switches them off then you will have all those street violent protests going on and there's a vicious cycle that we have to find a way of dealing with”.