Electricity price hikes in South Africa, consistently above inflation since 2008, have driven inflation and forced the Reserve Bank to maintain elevated interest rates. While inflation cooled in 2024, experts warn that structural drivers, particularly electricity tariffs, continue to put upward pressure on prices. Eskom's declining sales due to customers switching to alternative energy sources further exacerbate the situation, creating a potential death spiral for the utility.
South Africa’s electricity prices have consistently increased above the rate of inflation since 2008, pushing headline inflation higher and forcing the Reserve Bank to keep interest rates elevated.
While this approach has been criticised, Packirisamy pointed out that it is warranted as an aggressive and deep-cutting cycle could reignite inflation. Higher electricity tariffs have been combined with increases to other administered services such as municipal charges, water tariffs, and fuel prices.
Consistent above-inflation increases in the price of electricity has not only been a structural driver of inflation in recent years, but is now beginning to impact Eskom’s sales. The company has seemingly solved the load-shedding crisis in 2024, with power cuts implemented towards the end of March.This is largely due to the utility’s repeated above-inflation increases in electricity tariffs in South Africa over the past decade.
ELECTRICITY PRICES INFLATION SOUTH AFRICA ESKOM ALTERNATIVE ENERGY
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