How does SA's weakening exchange rate affect you?
A lower Rand is a reason of real concern as it hits us right in the pocket.
Imported goods prices are predicted to increase - and this isn’t just related to luxury items. This increase will include a whole lot of items that we consume and use every day. The further effect is expected to be a steep rise in Inflation.
Sadly, we've already seen that many imported products are costing more and, unfortunately, there will most likely be another spike in prices of goods on the shelves in the near future.
What is Inflation?
Inflation is defined as a sustained increase in the general level of prices for goods and services in a county and is measured as an annual percentage change. Under conditions of inflation, the prices of things rise over time. When prices rise, and alternatively when the value of money falls, you have inflation. (Information provided by Investopedia.com)
Petrol Hike: As seen (and felt) with last week’s fuel increase, this has a direct impact on consumers’ pockets. Fuel is SA's biggest import product and with the weakened rand, oil (that's priced in dollar) - is going to be more expensive.
Higher pap and bread costs: The higher fuel price has an immediate effect on the price of delivering all goods and food, but the rand/dollar price also has a direct impact on grain prices too. South Africa imports between 50% to 60% of its wheat needs annually. However, the weaker rand makes importing wheat more expensive which leads to higher prices for bread.
When it comes to maize, South Africa currently has a surplus, which means South African exporters have to compete in the international markets. Due to the fact that the dollar has strengthened against the rand, producers are getting more for their exports, meaning the local maize has to keep up with the demand.
Cellphones and electronics will be more costly: The prices of electronic equipment are among the most affected by a weaker rand.
But, unlike the fuel increase, these prices won’t be hiked by the same margin as the rand slump.
As you can see, times are tough for South Africa and the road ahead is going to be rocky. With pockets already stretched it is vital that you take immediate control of your financial situation, including your debt.
Our trusty team at Meerkat can provide immediate financial relief and protection from creditors. We enable you to pay off debt in an affordable way without losing assets. You pay one reduced instalment, and, in many cases, we can reduce the interest rate.
Contact us today and get set for a debt-free future.