The rising cost of motor insurance in South Africa is fast becoming unsustainable for many consumers. This, combined with the high volume of uninsured vehicles on the roads, has made it increasingly crucial that new measures such as compulsory third party motor property insurance are implemented, in order to widen the risk pool of participants […]
17 March 2016
Today the South African Reserve Bank (Sarb) governor Lesetja Kganyago announced that the repo rate will be increased by 25 bps from 6.75% to 7%.
Ian Wason, CEO of DebtBusters, SA’s largest debt counsellor, said “This repo rate increase will blow everyone’s budgets – South Africans cannot absorb any more increases in their debt repayments.”
This announcement does not bode well for South African consumers, as the Sarb’s decision to increase interest rates means that they will be paying even more toward their debt.
“The timing of this rate hike is extremely bad for most South Africans for a number of reasons;
- The Debt to income ratio among South Africans is already too high, leaving little or no money for living expenses.
- Consumers have already had to endure too many price increases this year; two consecutive hikes in the repo rate and ridiculously high food inflation.
- Still on its way, increases in the petrol levy (1 April) and Eskom’s 9.4% electricity tariff hike (1 April).
- The Rand continues to weaken, negatively impacting our economy and forcing prices even higher, not to mention the likelihood of lower salary increases and higher unemployment.
The knock on effect of this repo rate increase is that the cost of food, transport and rentals will climb even higher as stores, transport operators and landlords try to pass along the cost of their increased expenses onto consumers. Consumers can’t tighten their belts much more, without compromising their standard of living,” warns Wason.