More and more of the column inches of the newspapers in South Africa are being devoted to inflation, interest rates, petrol prices and the cost of living. While the entire world is suffering the slings and arrows of outrageous oil prices and the so called “credit crunch”, South Africa – as a developing economy – has taken a harder hit than most.
Being a weaker currency than those of the developed economies, our Rand has taken a bit of a battering. This means that imported goods are more expensive – and that includes oil. And – as you may know (unless you’ve been hiding out in a cave with Osama) – oil has also been going up pretty quickly anyway.
The effect of this is known in economic circles as “compound misery”.
So – because everything costs more to produce – inflation goes up, the Reserve Bank tries to stop people buying things by increasing interest rates and eventually, we all end up living on the grass we’ve been growing in our back gardens. (Stop sniggering at the back).
We’ve been hearing about this for a long time now. But it’s only in the last couple of months that it seems to really be hitting home for the general population. It’s as if a line has been crossed. Car sales are down 23% year on year. The housing market has stopped completely* in a way that would have the average Daily Mail reader contemplating suicide (oh go on then – if you must).
And then this from the Southern Suburbs biggest shopping mall on a Sunday lunchtime:
Cavendish Square – not square and not full
And yes – all the shops were open. It’s just that no-one has any money to spend in them.
We’ve been told to expect it to get worse before it gets better.
One wonders just how much worse we can manage.
* Although the headline “R110-million for SA’s priciest flat” might make you think otherwise…