The South African economy was expected to have a rough ride this year and it has and there is no quick fix in sight.

People were advised to be extra careful this year when spending as they will start to feel the pinch from rapidly rising prices of food and fuel , lofty interest rates and the inflation which rose above nine percent in February, the highest in the last five years , which added to speculation the central bank may resume raising interest rates.
Despite the attempts of the Reserve Bank to lower inflation by raising interest rates four times in 2007 the inflation rate has kept rising . The Rand is one of the few currencies in the world which has done worse than the dollar, decreasing by 15 percent in comparative value this year. This and a possible hike on electrical rates of 60% promise to keep inflation aloft well above that 3 to 6% .
All of this is giving the Central Bank a black eye and ruining their credibility because the numbers are increasing dramatically and they seem to not be able to control them.
This is further confirmed by Governor Mboweni’s prediction that the drop in value of the Rand will hold inflation above the usual for a longer time than expected. In January, the central bank forecast the inflation rate will peak at an average of 8.5 percent in the first quarter and drop within the target by the end of the year. We seem to be still going in the wrong direction and that is only hurting credibility of the banking institution.
The main reason for the current food inflation is a high global demand for wheat products, which puts an upward bias on local food prices. Other factors include grains, biofuel production and the demand for protein feed.
The effect of the increasing oil price on the price of gasoline has been a spike in prices. There has been a strong demand growth for oil from emerging markets such as China and India and this, in turn, has sent oil prices shooting up. .
So what can the individual man or woman in South Africa do in order to survive these turbulent financial times? This, of course, is a question with many small answers, not one big one. One can be certain, at least, of where the answer won’t come from. It won’t be from the government or the corporations or the bankers. Keep an eye out for individual innovations and grassroots movements.
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