Benign inflation seems to be over
The effects of the VAT hike and soaring fuel prices will hit hard
The days of benign inflation in South Africa and globally are likely numbered as major economies begin to tighten monetary policy. Locally, VAT, food and fuel could also push consumer prices higher. The fuel price is set to rise from May 2 by 49 cents a litre and diesel by either 58c or 59c a litre depending on the grade, it was announced by the Department of Energy on Thursday. The increase is driven by a weaker rand and a sharp hike in international oil prices. Internationally, the yield on US 10-year treasuries breached 3% this week, a first since 2014, another notch in the return to a pre-financial crisis economic climate. But with that there are concerns economies may start to feel inflation pressure. Global inflation has been relatively level over the past decade despite the "easy money" poured into major economies by central banks to stimulate growth in the wake of the global financial crisis. As the era of low interest rates comes to an end and major central banks tighten th...
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