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Staple Foods Are Fast Disappearing From The Table Of millions Of South Africans

In South Africa, almost 20 million people go to bed hungry each day, and 30 million run out of money every month, making it difficult to put food on the table. This is the bleak backdrop against which the next interest rate hike will be implemented by the South African Reserve Bank (SARB.) this coming week.

Economists at the Bureau for Economic Research (BER) warned in a research note that the May increase could be larger than previously forecast. According to the BER, factors such as rapid policy normalisation and the associated recent sharp weakening of the rand dollar exchange rate, as well as the sustained upside risks to domestic inflation, mean that the SARB is likely to hike the repo rate by 50 basis points next week – far higher than what was predicted earlier in the year. This is substantiated by credit rating agency Moody’s forecast that South Africa’s interest rate will hit 8% in 2022, due to our inflation rate hovering on the upper end of the South African Reserve Bank’s target band of 3-6% inflation.

The forecast comes after the US Federal Reserve hiked its policy rate by 50 basis points (bps) last week; the biggest increase in more than twenty years.

“This is very bad news for South Africa,” says CEO of Debt Rescue Neil Roets. “It’s no secret that when the US dollar becomes unstable, it has a ripple effect across the world – and the South African rand is no exception.”

He says the steep increase in interest rates will likely leave an even higher percentage of lower-middle to middle-income households paying significantly more for vehicles or properties to the extent that they would be forced to ‘buy down’ or cancel their insurance and savings products.  This is reflected in the most recent Debt Rescue survey results, showing that 53 percent have reduced their insurance products, while 20 percent have cancelled their policies. “This is never a good sign, especially in the current uncertain financial climate, and points to the level of desperation people are experiencing. The only other alternative is simply to incur more debt to cope with the additional expenses,” he emphasises. 

He warns that one of the most serious repercussions resulting from such a hefty interest rate hike, is the threat to food security. “It’s inevitable that such a sharp increase will once again drive up the price of basic food stuffs, leaving even more South Africans food vulnerable. Putting nutritious food on the table is becoming next to impossible for millions of breadwinners countrywide, and this is a direct result of recent food price increases, that have placed staple foods like cooking oil, potatoes, beef, fish, cabbage and bananas beyond the reach of millions of households,” says Roets. He adds that their recent survey results show that 54 percent of households have had to replace nutritious foods with cheaper, more filling ingredients.

Roets points to the Household Affordability Index food basket, released by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) in April, that shows yet another increase of R92.84 (2.1 percent), taking the cost of the average food basket from R4,450.09 in March 2022 to R4,542.93 in April 2022.  For many people, this amounts to their entire salary.

“Does this mean people below the bread line should live without the other essentials like water and electricity?  And how are they supposed to make their way to work every day? The reality is that more and more staple foods will disappear from the table in millions of households this month – and who knows what will happen next month,” he laments.

It’s no wonder then that Debt Rescue has seen a year-on-year increase in the number of South Africans seeking debt relief. “My advice to those who are in a debt trap is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” he says.