What is going to influence the decision this year is the 6.3% year on year inflation rate for May just reported. Contributing to that is a more than definite rise next week of 0.5% in interests rates, which may still turn out into a full 1% shocker.
Add those costs to the picture and the increase in the price of food and the average man on the street even if he gets 8% this year is still in my opinion going to be marginally poorer than he was a year ago.
In my humble opinion the biggest contributor to the pesky inflation in this country is none other than Government itself.
1. Each year for how many years now, Manuel adds 5 to 15c on to a litre of petrol.
2. The new Credit Act should have been in place 2 years ago.
3. Companies like Telkom who have a dandy monopoly over our Local Loop, Sat3 Cables etc have likely added a 0.5% or more into that whole picture.
4. Government is not spending and managing the Billions they have properly. There is simply so much wastage in Government Departments. Government might have a super Minister of Finance who knows how to punch the numbers and collect from Dick, Tom and Harry, but just about every other Department is inept in it's ability to use the money it has effectively.
5. The high rate of unemployment.
6. The negative growth in the Agricultural Sector fuelling the cost of food.
7. Local Government is not providing Capacity. Planning is inadequate and service delivery is at a low ebb. Yet they know how to push the price of Electricity by 18% and Water by 15%.
8. Rates are becoming a form of wealth tax to subsidise the inept Councils so that they can pay for sub contractors and those huge wage bills that produce very little in return.
9. Not teaching the people how to save. Although the new Pension Fund is a major step in the right direction, but time will tell if that can be managed properly when it does eventually come into force.
10. Because Government was slow to introduce proper credit extension measures the increase in Interests Rates - 2% in the last year - plus a further 0.5 to 1% next week and later this years - is only going to cut the disposable income of Joe Soap further.
11. So far Tito, Manuel and Co have done a reasonable job, but they need to rationalise what they are doing now, by starting to level off increases, decreases in levies, taxes, rates etc so that people can start to budget properly. Every time 5c is added to the cost of fuel Government becomes accustomed to that new money and starts to budget that it will retrieve that money in each year and the next. They become dependent on this income and instead of managing what they have, they are quick to add more pressure to the poor consumer with more taxes.
Look at the Western Cape for instance that already pays double in Licence Fees to pay for roads we have been told, but the Provincial Government adds another spoke in the fire by introducing a further tax to pay for roads once again. They vicious circle will never end.
In my opinion, the Strikes that are happening at the moment are only dealing with half the problem.
They are addressing the result of inflation and not the cause of it. They should be tasking Government to curb inflation and stop placing unnecessary pressures on the poor "taxed to death" South African Consumer. It is easy to sit in Government pushing paper like Manuel et al and see where they can squeeze more money from the country, but it is another to be on the receiving end of those taxes and interest rates.
when I said that.. tongue in cheek friend.
