By Daniël Minnaar
Interest rate
In its last sitting of the year, the Monetary Policy Committee raised the repo rate by 75 basis points to 7%. This brings the prime lending rate to 10,5%.
This rate increase means that agricultural producers will once again have to pay more to settle their debt. Amid excessive input costs, this increase in financing costs will place a further burden on the agricultural sector.
The immediate prospects for the interest rate also do not appear to be favourable. Given the current inflation rate, which remains high and outside the Reserve Bank’s target band of 3% – 6%, the interest rate is likely to be increased further at the next committee sitting in January. Indications are that the repo rate will be increased by 25 basis points to a peak of 7,25% in January.
Inflation rate
The average consumer paid 7,6% more for goods and services in October this year. This is slightly higher than the September rate, when consumer price inflation hit 7,5%.
The inflation rate was largely driven by the category of food and non-alcoholic beverages. This category was 12% more expensive in October than a year ago and contributed 2,1 percentage points to the inflation rate of 7,6%.
Oils and fats (25,7%), bread and grains (19,5%), meat (10,5%), and milk, eggs and cheese (10,5%) are some of the foods that have become significantly more expensive on an annual basis.
The category of transport also contributed significantly by 2,4 percentage points to the inflation rate of 7,6%. This category was 17,1% more expensive in October than a year ago. In this category, the cost of public transport increased 23,3%, and private transport by 25,5%. Transport costs were mainly driven by the increase in fuel prices. In October 2022, fuel was, on average, 30% more expensive than a year ago.
Unemployment
Employment, as measured by Statistics South Africa, improved in the third quarter of this year. Between July and September, 1,48 million more people were employed compared to the same period last year. This represents an annual increase of 10,4% and brings the number of people employed to 15,76 million.
Employment in the Western Cape increased by 9,1%, or 203 000 jobs, year-on-year. The province’s unemployment rate declined by 3% – from 27,5% in the second quarter to 24,5% in the third quarter – and is the lowest unemployment rate of all provinces.
Employment in the agricultural sector has also improved. Between July and September 2022, 43 000 more people were employed in this sector at a national level. This represents a 5,2% increase and brings the total number of people employed in this sector to 873 000.
Agricultural employment in the Western Cape increased by 8%, or 16 000 jobs, between the second and third quarters. On an annual basis, agricultural employment in the province increased by 3% or 6 000 jobs.
