Rising costs hit poor households hardest
Now is the winter of our discontent. Bills are piling up and Durban households are feeling the strain as lights and water charges are set to rise this month, with fuel, food and transport costs also increasing.
Economists have warned this will put a strain on already over-indebted households, while the Pietermaritzburg Agency for Community Social Action (Pacsa) has warned of growing food costs.
Its barometer for May shows that a nutritionally incomplete food basket costs a low income family of seven slightly less than R1 900, which is R200 more expensive than last year.
This comes on the back of the eThekwini Municipality’s utility rates increase kicking in this month, after it was announced in May that property rates would increase by 6.9%, water by 12.5%, sanitation costs by 9.9%, refuse removal by 7.9% and lights by 7.64%.
A fuel increase of between 11c and 42c for petrol and diesel respectively kicks in on Wednesday, and taxi fares increased last Friday.
According to Pacsa, the rising prices of maize meal, cake flour, sugar beans and chicken pieces were driving up inflation.
The difference between a nutritionally incomplete food basket and Pacsa’s minimum nutritional food basket - both for a family of seven - was about R2 400, with a nutritional basket costing just more than R4 300.
This means that low-income families are underspending on sufficiently nutritious, but very basic food, by 56.1%. This had implications for health and well-being, said Pacsa.
The Clairwood Ratepayers Residents Association chairman, Mervin Reddy, said residents had to spend more for less.
“Our community is typically one with low-income earners and ordinary households are spending in excess of R2 000 for food. People are changing lifestyles drastically, schools are expensive and some people have to move kids from schools because they want quality life for children, but it’s not affordable anymore.
“We are asking people to be thrifty with their money, try to cut down on luxuries - eating out and try to live a sustainable life.” Reddy said people should consider opening spaza shops to supplement their salaries.
Standard Bank’s chief economist, Goolam Ballim, warned that managing personal finances would become difficult in this period because inflation had been accelerating this year and was likely to remain elevated into next year. He said that food inflation, in particular, was strong.
“The remaining months of this year are likely to dim consumer spirits somewhat because of shallow real-wage increases.”
However some relief was in sight. Ballim said inflation was expected to decline next year and only then would the Reserve Bank be expected to lower interest rates.
Dawie Roodt, chief economist at Efficient Group, said he was concerned with the increase of electricity tariffs, because Eskom was “terrible” in the provision of distributing the service.
“Without a doubt this is going to have a negative impact on local consumer spending, it is not good at all,” Roodt said.
The lean budgets of state owned enterprises were also to blame for the increase in utility bills, according to Durban economist and businessman, Professor Bonke Dumisa.
He said the increase in bills and tariffs was adversely affecting consumers, compounded by the country’s unemployment rate, which was on the up.
“A few years ago, then Reserve Bank governor, Tito Mboweni, said local government and state-owned enterprises don’t place emphasis on ensuring they don’t exaggerate the administered price increases,” Dumisa said.