South African consumers are facing significant financial pressure amid a perfect storm of rising interest rates and inflation, driven by higher fuel, municipal tariffs, electricity, and insurance costs.
In late May, the Monetary Policy Committee (MPC) increased the repo rate by 25 basis points to 7% after three years of rate cuts. Consequently, commercial banks’ prime lending rate rose to 10.5%. The MPC said the reasons for the increase were inflation of 4%, above its 3% target, risks associated with the conflict in the Middle East and concerns that higher costs could become embedded in the economy.
National Debt Counselling Association (NDCA) chairperson, René Moonsamy, says these pressures increase the…