Inflation dips, but food prices still rising

19 July 2023

The DA notes the latest inflation figure of 5.4% as reported by Statistics South Africa (StatsSA). This figure, while marginally below the South African Reserve Bank's (SARB) 6% upper target limit, should not be mistaken for a sign of economic resilience.

It is important to recognise that a single dip below the upper range doesn't erase the government-induced cost of living crisis. Our economy remains in serious trouble with no sign of growth.

Crucially, beneath the headline figure, the devastating imprint of inflated living costs becomes apparent. A surge of 11.1% in food prices, with the cost of bread - a staple food - escalating by a devastating 15.5%, belies the inflation story. Increases of 9.7% in public transportation costs coupled with persistently high fuel prices, further amplify the fiscal pain experienced by struggling South African households.

The fleeting relief from inflation will not endure. The return of Stage 4 to Stage 6 load-shedding will undeniably strain the economy and escalate consumer pressures. Moreover, the South African government's support of Russia's illegal invasion of Ukraine will exacerbate inflationary pressures, with the detached ANC government prioritising political machinations over citizen welfare.

It is the economically vulnerable who will disproportionately shoulder the consequences. Recent data revealed a sharp 9.9% rise in the annual cost of living for our poorest households. The same data highlights that these households already expend half of their income on food, making them devastatingly vulnerable to food price inflation.

To mitigate this, the DA, propose the following immediate measures:

Cutting the fuel levy;

Increasing solar tax rebates to free consumers from Eskom's stranglehold; and

Broadening the zero-VAT rated food basket to encompass essentials such as bone-in chicken, beef, tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee, and soup powder.

The inflation figures underscore the need for immediate and decisive government action to counter the mounting cost of living crisis. South Africans are calling for concrete change, and the DA remains unwavering in its commitment to champion these measures. The broader dire economic situation requires a response, and silence is unacceptable.

Issued by Dion George, DA Shadow Minister of Finance, 19 July 2023