The Monetary Policy Committee’s decision on the matter will become known shortly as Kganyago addresses the country in a briefing beginning at 3 pm. South Africa’s inflation rate for August 2021 rose to 4,9% from 4,6 % in July. 

North West University (NWU) Economics Professor, Waldo Krugell, says presently inflation is not that high as to warrant an increase in the repo rate to manage it down. The repo rate, a.k.a the repurchase rate, is the fixed rate at which commercial banks lend money from the Reserve Bank. Presently it stands at 3,5%. 

Krugell does caution South Africans to pay close attention to Thursday’s announcement.

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"But we know that the Reserve Bank manages inflation expectations 12-18 months ahead. If inflation of around 5% becomes next year’s price and salary increases, real interest rates will be low and the repo will have to increase. We all have to listen to the MPC’s statement on Thursday, so as not to be surprised later on,” warns Krugell.

The rise in fuel and food were the biggest contributors to the latest hike in inflation numbers. Statistics South Africa (Stats SA) says petrol prices recorded all-time highs in August 2021, with the price of inland 95-octane petrol, reaching R18,30 per litre. “Fuel prices increased by 4,9% between July and August and by 19,6% over the last 12 months,” according to Stats SA. This, in turn, had an impact on public transport fares, which rose in the same period.

This is a developing story.

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