The repo rate is the base interest rate that the Reserve Bank charges to commercial banks when they borrow money. In order to control inflation, the Reserve Bank sets the level of the repo rate to influence the interest rates that Banks pass on to their customers. An increase in the Repo rate helps to control and prevent an excessive growth in bank lending, which in turn controls inflation.
1 February 2017
February has been dubbed the month of love as we prepare to dazzle our Valentine’s day dates. However, it is important for consumers to be vigilant with their finances as we are greeted with another fuel increase this month. South African consumers will have to incorporate a 29c/l and 21c/l increase in petrol and diesel, respectively, into their budgets.
The Department of Energy has stated that the increase in fuel price can be attributed to the current Rand/Dollar exchange rate, the crude oil price increase as well as increases in the international prices of petroleum products. Annual increases in expenses such as school fees, coupled with the drought that continues to affect food prices and water usage, will put even more financial pressure on already struggling South African consumers.
It is important that consumers take time out this month to review their finances and make sure that a financial plan is put in place in order to remain in control of their finances. With the price of basic living expenses on the rise, an emergency savings plan and regular budgeting will help prepare for unforeseen circumstances and further price increases.
In short, it may be time to scale down on the Valentines day plans and focus rather on having a healthy relationship with your finances.