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LETTER: SA inflation hits highest since 2017: what this means for workers and how firms can help

The main areas contributing to the 5.9% annual inflation rate were food and non-alcoholic beverages, as well as housing and utilities and transport. File Picture: Karen Sandison/African News Agency (ANA)

The main areas contributing to the 5.9% annual inflation rate were food and non-alcoholic beverages, as well as housing and utilities and transport. File Picture: Karen Sandison/African News Agency (ANA)

Published Jan 26, 2022

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Statistics South Africa recently announced the country's annual consumer price inflation climbed to 5.9% in December 2021– the highest year-on-year increase since March 2017 when the rate was 6.1%.

The main areas contributing to the 5.9% annual inflation rate were food and non-alcoholic beverages, as well as housing and utilities and transport. Unfortunately these are “must-have” areas; making the importance of saving, careful planning and budgeting and avoiding bad debt even more important for South Africans.

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Inflation impacts a number of areas in terms of the financial wellness of South Africans – how much we have to spend on necessities as well as how much we need to put away for unexpected emergencies – and our likelihood of seeking out bad debt to make it to month-end. Employers can play an important role in helping employees to stem the rising tide of cost pressures, especially in times of high inflation.

Employers can help their staff by using payroll-linked fintech, like Floatpays, to provide them with both on-demand access to accrued earnings – giving them an alternative to credit and helping them avoid the debt trap – as well as a savings vehicle that is linked directy to their paycheck, which drives a savings disclipline that is crucial during times of high inflation.

Savings discipline is crucial during times of high inflation. Inflation can affect how much employees need to put away for unexpected financial emergencies. A good emergency savings fund should have enough money to cover three to six months of living expenses. But over time, if expenses increase because of inflation, the amount you need to put away should increase too, or else you could come up short in a pinch.

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Simon Ward, founder of local fintech Floatpays.

Daily News

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