Statistics South Africa (StatsSA) reports 5.4% headline inflation: While slightly below the 6% upper target limit set by the South African Reserve Bank (SARB), it’s not a sign of economic strength.
A slight dip below the upper range doesn’t erase the crisis driven by government-induced living costs, causing food prices to rise steadily and leaving vulnerable South African households struggling. Our economy remains troubled, with no signs of growth on the horizon.
Beyond the headline number, today’s data paints a grim picture of the harsh impact of surging food prices, well above the headline Consumer Price Index (CPI).
General food prices have surged by a staggering 8.2%, while essential items like bread and vegetables have seen increases of 9.3% and 15.2% within the year. This crisis is particularly severe in rural areas and among lower-income households.
Lower-income South African households bear the brunt of the government’s lack of foresight and hesitation to implement necessary fiscal measures to combat the rising cost of living. For the poorest 60% of South African households, the annual cost of living increase exceeds headline inflation. With half of their income already allocated to food, these households are exceptionally vulnerable to rising prices.
While the Cabinet mandated the Economic Cluster months ago to develop a plan to lower food prices and improve food security and access, no concrete plan has emerged.
Meanwhile, the DA has taken proactive steps and presented viable measures to reduce food costs.
Despite Finance Minister Enoch Godongwana hinting at a potential VAT increase, which would further inflate prices, it’s crucial that the Minister considers the DA’s proposals in the upcoming Medium Term Budget Policy Statement (MTBPS). These proposals include:
- Increasing solar tax rebates to reduce reliance on Eskom.
- Lowering fuel taxes.
- Expanding the list of zero-VAT-rated essential foods to include items like bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder.
The inflation figures highlight the urgent need for decisive government action to address the growing cost of living crisis. South Africans are demanding real change, and the DA is resolute in our commitment to seeing these tax proposals implemented to ease their burden.
The DA will submit a memorandum to the Minister of Finance next Friday and present our alternative MTBPS on October 30, 2023.
