Consumers in South Africa had to endure another blow after the South African Reserve Bank (SARB) hiked the repurchase rate (repo rate) once again.
The SARB governor, Lesetja Kganyago announced a 50 basis point hike to the repo rate meaning that the rate will now increase to 8.25%, taking the prime lending rate to 11.75%. in the country.
Brina Biggs, Senior Manager at 1Life said that the 50 BPS increase offset any reprieve that the drop in fuel price was going to bring next week.
“We have been in an upward rate cycle for the past two years with prime right now at 11, 75% and repo rate at 8.25% - up from 3.75% in November 2021. This is a massive impact on consumer debt. South Africans have been battling financially this year with the highest food inflation we have seen in six years - driving a very high cost of living that is untenable,” Biggs said.
“There are no more notches in the belt for your average middle class or other to tighten, and we know salaries are not stretching in line either. We want to avoid a knee-jerk reaction to the crisis and stay on course financially because what you do now can have an enormous ripple effect on you and your family,” she said.
“Practical advice is to create a budget and stick to it, look at alternative sources of income, and downgrade where you can. Do not look for short-term loans or cutting important insurance cover, as these are what hurt any wealth that you can create for yourself and your family,” Biggs further said.
“Speak to your family members, pull resources together, and stick to a budget while we ride this out. With every low comes a high, so we just need to hold out until the tide turns,” she said.
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