{"id":65984,"date":"2024-05-13T17:56:19","date_gmt":"2024-05-13T17:56:19","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates"},"modified":"2024-05-13T18:06:29","modified_gmt":"2024-05-13T18:06:29","slug":"government-to-blame-for-high-interest-rates","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates","title":{"rendered":"Government to blame for high interest rates"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>Government spending and repeated above-inflation increases for administered services such as water and electricity supply have kept inflation elevated, forcing the Reserve Bank to keep interest rates higher for longer.<\/p>\n

This is feedback from Old Mutual Wealth investment strategist Izak Odendaal, who said interest rates are unlikely to come down as quickly as previously expected.<\/p>\n

One of the main reasons for this is the conflict in the Middle East, which has kept the oil price high and even threatened to push it above $100 per barrel, resulting in higher fuel prices globally.<\/p>\n

However, there are several local reasons that have kept inflation and, subsequently, interest rates elevated.<\/p>\n

Chief among these are the significant increases in government-administered services, which have run well above headline inflation over the past decade.<\/p>\n

Administered services range from electricity tariffs to municipal charges and have a significant impact on inflation as many of these services are universal inputs in the economy. Thus, when the price for these services rises, the entire cost base of the economy rises, too.<\/p>\n

Odendaal said it is ironic that while the government sets the inflation target for the Reserve Bank to adhere to, it has been the biggest culprit in not adhering to it.<\/p>\n

In particular, steep annual upward adjustments in electricity tariffs and municipal charges have driven overall administrative services inflation.<\/p>\n

The government has also given generous above-inflation wage and salary increases to its workers over the past decade.<\/p>\n

Meanwhile, government inefficiencies, especially local government, significantly raise the cost of doing business.<\/p>\n

\u201cA renewed commitment across government entities to adhere to its own inflation target will go a long way to achieving it,\u201d Odendaal said.<\/p>\n

The rise in administered prices is shown in the graph below.
\n
\nOdendaal\u2019s concerns echo those of the South African Reserve Bank (SARB), which said administered price increases are making it difficult for it to cut interest rates in its Monetary Policy Review.<\/p>\n

\u201cAs inflation risks emerge and materialise, and services prices normalise, the path back to the target midpoint is expected to take time,\u201d it said.<\/p>\n

\u201cThe repurchase (repo) rate at 8.25%, unchanged since May 2023, remains broadly consistent with persistent inflation, the uncertain domestic and global outlook, and getting back to the 4.5% midpoint over the forecast timeframe.\u201d<\/p>\n

One factor putting pressure on inflation is administered prices, which the SARB said continue to exert substantial upward pressure on headline inflation.<\/p>\n

\u201cThese regulated, public sector-controlled prices impede efforts to bring inflation down and maintain it at the midpoint of the target band; consequently, they also erode competitiveness,\u201d it explained.<\/p>\n

\u201cElectricity and water prices, in particular, have for several years inflated at rates well above the 4.5% midpoint of the inflation target band.\u201d<\/p>\n

Last year, it was estimated that Eskom had increased the price of electricity by 446% since load-shedding began in 2008, driving inflation in South Africa and significantly increasing the cost of doing business.<\/p>\n

This number is likely far higher now in light of April\u2019s electricity price increase.<\/p>\n

At the start of April, Eskom confirmed that it will implement its annual price increase. The National Energy Regulator of South Africa (Nersa) granted Eskom a 12.74% increase for its direct customers.<\/p>\n

\u201cEfficiency gains in these sectors would be important to ensuring that long-run, cost-reflective prices are achieved soon,\u201d the SARB said.<\/p>\n

\u201cOther administered prices, such as education and assessment rates, are influenced by headline inflation outcomes and should be more closely aligned to the target midpoint itself.\u201d<\/p>\n

\u201cReducing headline inflation would bring down administered price inflation, creating a virtuous cycle.\u201d<\/p>\n

For More News And Analysis About South-Africa<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. Government spending and repeated above-inflation increases for administered services such as water and electricity supply have kept inflation elevated, forcing the Reserve Bank to keep interest rates higher for longer. This is feedback from Old Mutual Wealth investment strategist Izak Odendaal, who said interest rates are unlikely to come down as quickly […]<\/p>\n","protected":false},"author":84,"featured_media":65983,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[274,315,275],"class_list":["post-65984","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-south-africa","tag-south-africa-2"],"yoast_head":"\nGovernment to blame for high interest rates - South Africa<\/title>\n<meta name=\"description\" content=\"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Government to blame for high interest rates\" \/>\n<meta property=\"og:description\" content=\"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-05-13T17:56:19+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-05-13T18:06:29+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"768\" \/>\n\t<meta property=\"og:image:height\" content=\"432\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Government to blame for high interest rates\",\"datePublished\":\"2024-05-13T17:56:19+00:00\",\"dateModified\":\"2024-05-13T18:06:29+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\"},\"wordCount\":598,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-South-Africa\",\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\",\"name\":\"Government to blame for high interest rates - South Africa\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg\",\"datePublished\":\"2024-05-13T17:56:19+00:00\",\"dateModified\":\"2024-05-13T18:06:29+00:00\",\"author\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"description\":\"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...\",\"breadcrumb\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage\",\"url\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg\",\"contentUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg\",\"width\":768,\"height\":432,\"caption\":\"Government to blame for high interest rates\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.africa-press.net\/south-africa\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Government to blame for high interest rates\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#website\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/\",\"name\":\"South Africa\",\"description\":\"Just another Africa News Agency Sites site\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.africa-press.net\/south-africa\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\",\"name\":\"cfeditoren\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g\",\"caption\":\"cfeditoren\"}}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Government to blame for high interest rates - South Africa","description":"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates","og_locale":"en_US","og_type":"article","og_title":"Government to blame for high interest rates","og_description":"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...","og_url":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates","og_site_name":"South Africa","article_publisher":"https:\/\/www.facebook.com\/AfricaPressTunisiaa","article_published_time":"2024-05-13T17:56:19+00:00","article_modified_time":"2024-05-13T18:06:29+00:00","og_image":[{"width":768,"height":432,"url":"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg","type":"image\/jpeg"}],"author":"cfeditoren","twitter_card":"summary_large_image","twitter_misc":{"Written by":"cfeditoren","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#article","isPartOf":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates"},"author":{"name":"cfeditoren","@id":"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb"},"headline":"Government to blame for high interest rates","datePublished":"2024-05-13T17:56:19+00:00","dateModified":"2024-05-13T18:06:29+00:00","mainEntityOfPage":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates"},"wordCount":598,"commentCount":0,"image":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage"},"thumbnailUrl":"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg","keywords":["Africa Press","Africa Press-South-Africa","South-Africa"],"articleSection":["all news","economy"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates","url":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates","name":"Government to blame for high interest rates - South Africa","isPartOf":{"@id":"https:\/\/www.africa-press.net\/south-africa\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage"},"image":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage"},"thumbnailUrl":"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg","datePublished":"2024-05-13T17:56:19+00:00","dateModified":"2024-05-13T18:06:29+00:00","author":{"@id":"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb"},"description":"Government spending and repeated above-inflation increases for administered services such as water and electricity suppl ...","breadcrumb":{"@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#primaryimage","url":"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg","contentUrl":"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2024\/05\/sm_1715610823.421105.jpg","width":768,"height":432,"caption":"Government to blame for high interest rates"},{"@type":"BreadcrumbList","@id":"https:\/\/www.africa-press.net\/south-africa\/all-news\/government-to-blame-for-high-interest-rates#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.africa-press.net\/south-africa\/"},{"@type":"ListItem","position":2,"name":"Government to blame for high interest rates"}]},{"@type":"WebSite","@id":"https:\/\/www.africa-press.net\/south-africa\/#website","url":"https:\/\/www.africa-press.net\/south-africa\/","name":"South Africa","description":"Just another Africa News Agency Sites site","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.africa-press.net\/south-africa\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb","name":"cfeditoren","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/7417380fa9e23b5c57fdbfdaf3fdf92ee478f759a084addda5faa3732853e74a?s=96&d=mm&r=g","caption":"cfeditoren"}}]}},"_links":{"self":[{"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/posts\/65984","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/users\/84"}],"replies":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/comments?post=65984"}],"version-history":[{"count":0,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/posts\/65984\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/media\/65983"}],"wp:attachment":[{"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/media?parent=65984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/categories?post=65984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.africa-press.net\/south-africa\/wp-json\/wp\/v2\/tags?post=65984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}