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If there are any conclusions to draw from the public hearings hosted last week by the National Energy Regulator of SA (Nersa) on Eskom’s proposal to raise tariffs by 20.5% for 2022/23, it would be that for both residential and industrial electricity users, such an increase will be unaffordable — but at the same time for Eskom a double-digit increase is necessary to keep the lights on and perform critical maintenance work.

One of the most direct impacts of a sharp electricity tariff hike will be on consumer inflation. According to Hugo Pienaar, chief economist at the Bureau for Economic Research (BER) — a research institute at Stellenbosch University — their bottom-up inflation model indicated that if there was, for argument’s sake, a zero tariff increase this year, headline CPI would average about 4.8% in 2022. With a 20.5% rise in the electricity tariff, CPI would move to an average of 5.3% in 2022. ..

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