The drop in inflation from 4.4% in August to 3.8% in September would be positive or negative depending on the views of the power brokers who heard it. However political parties and unions, allies and rivals welcomed the latest data as news in a positive light. This decline – the lowest level since March 2021 – has provoked responses from various political parties and labour unions, highlighting differing perspectives on the causes and implications of the change.
ActionSA has welcomed the latest inflation figures, attributing the decline primarily to the South African Reserve Bank’s (Sarb’s) disciplined monetary policy. “This achievement demonstrates the effectiveness of Sarb’s disciplined approach to monetary policy during a time of ongoing economic uncertainty,” Alan Beesley, ActionSA Member of Parliament said. He emphasised that the lower inflation rate could pave the way for further interest rate reductions, providing much-needed relief to South Africa’s poorest citizens. Beesley also criticised the government of national unity (GNU) for attempting to take credit for the improved inflation figures. “It is Sarb’s austere and responsible monetary policy that has successfully navigated South Africa through tough economic conditions.” He called for greater transparency and accountability in the government’s economic role, urging citizens to recognise that the inflation relief stems from effective monetary policy rather than political grandstanding.
Action SA is possibly right on the money with stating that the South African Reserve Bank (SARB) should deserve credit for the lower inflation, due to disciplines in its fiscal policies. The approach SARB has taken to curb inflation that had risen due to the war in Ukraine as a result of rising oil and food prices. It is SARB which should take a pat on the back for their fiscal reforms, such as lowering the repo rate or repurchase rate. This lowered the prices of basic food stuffs and other commodities which were a financial burden to South African consumers and their households. The Government of National Unity (GNU) is only a few months old and have yet to make a significant impact on the economic landscape.
President Cyril Ramaphosa still has to put together a plan that improves the overall growth of the economy. The economy is like a pie that that has to be grown so the pieces taken from it and shared among the populace can be of benefit to them.
Conversely, the Economic Freedom Fighters (EFF) welcomed the decline in CPI (Consumer Prices Index) but criticised Sarb’s monetary policies as inadequate and outdated. EFF spokesperson Leigh-Ann Mathys argued that the current inflationary pressures are systemic and not driven by demand. “The inflation figures released today further validate our position that the high interest rate regime was misguided from the beginning,” she said. Mathys contended that the Sarb’s reliance on high interest rates has contributed to economic stagnation and exacerbated unemployment and inequality. She urged Sarb to adopt a “more progressive, responsive, and inclusive approach,” highlighting that the recent 25 basis point cut in the repo rate was insufficient given the economic challenges facing many South Africans.
The Congress of South African Trade Unions (Cosatu) expressed appreciation for the decline in inflation, viewing it as a much-needed relief for workers burdened by debt and rising living costs.
The decline in CPI shows there is much to be desired for in terms of lower interest rates for consumers. However even EFF is possibly right in arguing that the monetary policies of the country’s chief bank need to be massively reformed. This includes the fact the that policy of austerity and frugality should be followed by the government at all levels and throughout all branches of the state. The Inflation rate was too high for the economy/pie to benefit the populace (people). On this note even the EFF is right. The lowering of interest rates would somehow become inevitable, depending on what steps were taken to make it so. SARB is the chief bank in the country responsible for managing the value of the currency and does so in accordance with what rout is best for the economy.
The cut back in the inflation rate is a relief to everyone across the financial strata. Cosatu is right to claim this as reprieve after the rise in food prices. It will mean most working families will be able to feed their hungry children. Meanwhile on the other side of the economic spectrum President Ramaphosa from Russia stated that the BRICS economic partnership will provide an opportunity to change the trajectory of the global South. The President was speaking at the BRICS 16th Summit in Kazan, Tatarstan, Russia.
The South African head of state said BRICS is an inclusive formation that has the ability to change the Global South, but in order to do this, nations must realise the full potential of this economic partnership to ensure sustainable development for all. “To achieve the objectives of the BRICS Strategy for Economic Partnership 2025, we must further explore pathways to unlock opportunities and address challenges confronted by micro, small and medium-sized enterprises in BRICS countries,” he noted. “We must intensify cooperation among BRICS members by launching common development programmes in the fields of exports, industrial cooperation and technology exchange.”
As a result, Ramaphosa has called for the recalibration of trade rules to enable industrialisation.
The president is accurate in his argument that BRICS is a major force to be reckoned with when its member states utilize their industries. Cooperation not conflict is the key to prosperity if BRICS nations agree to redraw the trade rules. Ramaphosa needs to display the same leadership style on the African continent in regard to the African Continental Free Trade Agreement (AfCFTA). Both BRICS and AfCFTA are about building bridges and connections between developing nations. For BRICS it’s the Global South, for AfCFTA it’s the African countries that are signatories to the agreement. If developing nations prioritise economic reform and cooperation on trade over war and conflict, they could become commercial centres for industry and free trade.
Mediation and diplomacy between rivals and adversaries are a necessity to grow the organization of BRICS. This is true in the case Ethiopia and Egypt, Iran and the Saudi Kingdom. The end of tariffs opens new opportunities for free trade development and South Africa can use this to its advantage. We could see the aim to end to inflation soon and strengthen the Rand. Only time will tell how this struggle will play out.
Article written by:
Yacoob Cassim
Journalist at Radio Al Ansaar
