Better, swifter economic policies, such as bringing in new power producers or cutting the fuel levy, could materially help
Monetary policy, or more specifically the way central banks and policymakers manage interest rates, is the default mechanism for combating inflation.
South Africa’s unemployment and poverty statistics make for notoriously painful reading, yet interest rates are being increased to reduce prices. It is important to remember that monetary policy theory suggests that higher prices are reduced by muting what is assumed to be cyclically higher demand, but in South Africa we don’t have too much demand. Rather, we have too little, to the point that the economy is under significant pressure.
Much of what South Africans are experiencing in the form of higher prices are related to supply-side issues. The inflationary effects caused by a lack of a steady and stable supply of energy globally has been exacerbated locally by the impact of electricity shortages and load-shedding. Businesses are increasing prices to offset the additional costs they have to incur, in the form of diesel for generators, for example — a cost already running into the billions.
Second-round benefits then also pass through in the form of a stronger currency, which reduces input cost, and so the virtuous cycle continues. Countries that manage supply-side costs effectively are more productive, and more competitive on the international stage
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Adriaan Basson | Sorry Mr Mashatile, but you cannot fool all South Africans all the time | News24OPINION | Deputy President Paul Mashatile and his coterie of spin doctors won't succeed in 'changing the narrative' of the very real and troubling revelations exposed by News24, writes Adriaan Basson.
Read more »
Volkswagen says Africa needs better auto policies to stimulate production - The Africa Report.comGerman carmaker Volkswagen wants to expand in Africa to reduce reliance on Chinese production but needs effective domestic auto policies, says managing director for VW South Africa Martina Biene. Report by jnyabor
Read more »
Is gluten-free bread better than regular bread? | LifeGluten-free bread is an option for those with wheat sensitivities or other allergies and conditions. But, if you're just seeking to reduce inflammation, experts say you should first understand where you stand on the scale of gluten intolerance.
Read more »
OPINION | Beauty queens and slurs don't mix. Unpacking Ratile Mabitsela's toxic comment | LifeIn the latest episode of The Mommy Club, Ratile Mabitsela called fellow cast member Tshego Manche a slur. Mabitsela should hold herself to a higher standard, writes Kaunda Selisho.
Read more »