The Congress of South African Trade Unions (COSATU) is relieved the South African Reserve Bank has held the repo rate steady at 7%.
This is despite Statistics SA’s announcement yesterday that inflation had increased to 5% in June – the highest since June 2024 when it was 5.1%. The spike in inflation was attributed to rising fuel prices and electricity tariffs.
In the last 12 months, fuel has shot up by an average 34% mainly due to the war in the Middle East. Transport costs have also gone up as a result. Stats SA pegged transport inflation at 13%, while electricity tariffs have increased by 10%.
An increase in the repo rate would have seen workers sink deeper into debt. A Debt Busters survey revealed that 53% of respondents spend more than 40% of their take home on debt repayments. Devastatingly, when money runs out before the end of the month, they are forced to borrow to make ends meet, drawing them further into debt. Even more heartbreaking, they are borrowing to buy basics such as food, electricity and pay for transport.
The rate hike would have resulted in home, car and credit loan repayments escalating, putting struggling working- and middle-class households under even more financial pressure. In an economy that hasn’t grown beyond 1% in more than a decade, with an alarming unemployment rate of 43.7%, those who are fortunate to have jobs support on average seven relatives on one salary.
COSATU recently marched to the Reserve Bank to highlight the plight of workers battling the ever-escalating cost of living. Among the demands included in the memorandum to the SARB were the following:
- Reduction in electricity and water prices
- Lower fuel and food prices
- End to austerity and extension of the social wage
- Reserve Bank must halt repo rate increase
The Federation is pleased the SARB has heeded our call to halt repo rate hikes, thereby providing relief to a society already drowning in debt. This will help workers take care of their families in a very difficult economic climate. It is critical that as inflation falls as projected in the latter half of the year, the Reserve Bank begin to lower the repo rate and thus providing badly needed breathing space for workers and helping to stimulate economic growth.
Issued by COSATU
Zanele Sabela (COSATU Spokesperson)
Mobile: 079 287 5788 / 077 600 6639
Email: zaneles@cosatu.org.za