More bad news for consumers as economists predict another interest rates hike

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There is more bad news for hard pressed consumers as the Reserve Bank is likely to hike interest rates this week. Economists expect the Reserve Bank to hike interest rates this afternoon on the back of surging fuel and food prices. The bank’s Monetary Policy Committee is currently meeting. It had its last meeting in January before tensions between Ukraine and Russia escalated.  

Statistics Chief Economist at PWC Lulu Kruger says further rate hikes could be on the cards in the next few months if the situation in Eastern Europe deteriorates.

“The inflationary environment has been deteriorating for a few months now and it’s in fact been a point of pressure since last year, but with the increase in risk coming from Ukraine and Russia that has put additional pressure on inflation. The Reserve Bank’s Monetary Policy Committee is bound to increase interest rates and in fact there could be an increase in every meeting this year, of about 25 basis points. The question now is if they will stick to the 25 basis points or if they would look at a fifty basis point increase.” 

Statistics South Africa on Wednesday released the Consumer Price Index for February, which is unchanged from January’s figure of 5.7% year-on-year.  

On a month-on-month basis, February’s CPI was higher at 0.6%, compared with 0.2% in January.   

Economists say the bank will probably hike rates between 25 to 50 basis points to try and tackle raising inflation.  

This means consumers could folk out even more for their credit and loans.  

South Africans are already feeling the weight of higher food and fuel costs.  

Petrol has gone up, currently at over R20 a litre inland, and is expected to further increase.  

Food and fuel prices are the main drivers of inflation in South Africa.  

Meanwhile, investors worldwide are also bracing for more aggressive US rate hikes after its Federal Reserve Chair flagged further and faster tightening of monetary policy to deal with higher inflation. 

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