South African's are having a rough time financially of late and the outlook is not looking any better for the the foreseeable future. I know as we as a family are definitely feeling the financial squeeze and keeping a close watch om the outgoings each month.
Last week the interest rates were increased by 50 BPS and is now sitting at 7.75%. Just to give an example a house loan of $110K will now cost $300 per month more than when it did 18 month ago. The prime lending rate has risen from 10.76% to 11.25% and knowing most of the country is already living on credit this is not good news.
I have raised this point before which makes South Africa's inflation far worse is the load shedding which has huge implications besides the no power at work or home. A stat released last week had 70% of the country's population not able to afford counter measures for the loss of power besides having candles. The food prices due to food manufacturers and retailers requiring supplementary power sources has seen them rise at crazy levels unimaginable.
The end result is even the upper middle income brackets are starting to sweat and brand loyalty has long disappeared as price is now the key factor. You buy what you can afford and not what you would like as just this year we have seen 25-30% increases on the basics like bread and milk.
If you compare the prices to other countries they may still seem cheap but everything is relative to the currency you are earning. South Africa has a high unemployment rate of 32.7% which is actually closer to 50% if they were being truthful.
The Rand has lost 24% against the US Dollar in the last 12 months and is now at R18.07 for 1 dollar. This is more like where the GBP was a few years ago against the Rand which is now R22.45 per Pound. All this does is make the imports that much more expensive yet the exports should be booming with the exchange rates, but cannot be taken advantage of due to the higher production costs now being experienced.
Kind of a depressing situation all round and not one to celebrate the Easter holidays over. This is just a perfect economic shambles with most of it being self inflicted by our wonderful leadership. I think everyone knew they were clueless from day one, but now it is going to take a genius to fix this and there are none around.
The current situation is the worst I have seen it as there is very little money being spent in the shops in comparison to even 2 years ago as the public has limited finances that are shrinking each month. Tonight my generator is the only one humming in our street and I kind of feel guilty as I know they are all sitting in the dark besides one or two houses with solar.
In the last quarter of 2022 another 800 000 new credit cards were issued to clients and now they are going to feel financial pain. When will people learn you don't touch credit as whatever you purchase will cost you 30=50% more and nothing is worth that. I just don't see a happy ending happening in South Africa as the hole is only getting deeper each month.
