Guiding consumers since 2009

What is the outlook for inflation?

By Staff Writer

Consumer inflation, the measure of how quickly the shops are getting more expensive has finally come within the Reserve Bank's target range of 3 to 6 percent. This is the outcome of the inflation targeting via interest rates strategy that the Reserve Bank has been mandated to pursue for some time now. This is good news for consumers for while things are still getting more expensive, it is happening less quickly that a year ago. New statistics, however, show that inflation at the factory gate, is in fact, deflating. So what does this mean?

 

 

The recession, which is now officially over, put strain on producers. Inventory levels were run down and factories were not producing as much as before the recession. This, in part, explains the PPI deflation figures. It is not often that things get cheaper to make, but this is the case at the moment. These savings are not being passed onto the consumer as the headline consumer rate of inflation is still growing at 5.9%, even if that is now within the Reserve Bank's target range. The festive season is coming and it looks like the shops will be profit taking, further straining consumers.

Retailers had a hard time of it, like everyone, during the recession. Consumers are still cash strapped and needing to manage their debts rather than go on a spending spree this festive season. It looks like it might be a slow shopping month this December when the economy still needs all the help that it can get. If retailers passed the savings caused by PPI deflation then the outlook may be a bit brighter. So don't go crazy over the holiday season, plan your budget and stick to it, and pay those debts off rather than racking up more in presents, holidays and treats. Not much fun, but the economy is still shaky.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?

 

How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions