R500 used to be enough to buy a week’s worth of groceries for two people, and this isn’t a “back in my day” situation either.
This was as recently as two years ago – remember that?
The truth is that the cost of living, when it comes to the price of petrol, electricity and groceries is getting higher and higher.
To put it simply, 2018 has been a rough year for South African consumers.
Business Insider looked into just how tough it’s been, and how we compare to other developing countries.
Unsurprisingly, petrol price hikes have had the most effect on our pockets this year.
“In the first week of October 2018, crude oil reached its highest recorded levels since 2014, trading at around $86 per barrel,” she said.
“According to the Global Petrol Prices website, the world average prices for petrol and diesel sit at around $1.17 and $1.09 respectively.
“In South Africa, the dollar price is $1.18, which is in line with the global average price. However, when compared to BRICS (Brazil, Russia, India, China, and SA) and other emerging economies, South Africa is at the upper end of the spectrum.”
Which brings us to our currency. In case you’re wondering, the rand has been converted into dollars above to make the international comparison easier. As for how rising fuel costs will affect the rand – well, let’s just say it doesn’t look great.
“The currency plays a large part in adding to inflationary pressures, not only for fuel, but also for foodstuffs and other transportable goods.
“This feeds into decisions made by the Central Bank about the future path of interest rates. The South African rand is the fourth-worst performer within the emerging market basket of currencies for the year 2018.”
Which brings us to electricity. First off, Eskom is THE WORST. Now that that’s out of the way, it’s important to note that electricity prices feed into inflation figures, and directly and adversely impact consumers when prices increase.
This is likely to be further compounded in the coming months after the National Energy Regulator of South Africa (NERSA) announced that Eskom was granted at least 4.4% in increases for the next financial year – kicking in on the 1 of April 2019.
“This amount is over and above the amount they will already be allocated by NERSA,” she said.
“Eskom gets their standard approvals in the Multi-Year Price Determination process, meaning that electricity price increases could be in the double digits when those two figures are added together.
When compared with other emerging markets, South Africa has the second-highest electricity prices:
The price of electricity and petrol affects the cost of groceries, due to transport and storage of consumer goods.
Citing Numbeo – a site which calculates the global prices of goods – Hatendi-Matika said that three of the five chosen foodstuffs used to compare prices see South Africa as the most expensive when compared to the basket of chosen emerging market countries.
Numbeo calculates the cost of goods at the minimum recommended amounts for an individual to consume per food type in US dollars. You get the idea, though:
The problem with inflation is that salaries aren’t inflated along with the cost of fuel or electricity to make up for the hike.
Which means that, unless you’re a CEO or a CFO cashing in on your multi-million bonus, the cost of living is set to get higher and higher.