Meanwhile, those interest rates keep going up and up

feather effect”, whereby prices are quick to increase and slow to decline because there is cost inflation in the value chain. The Competition Commission’s current concerns include a wide farm-to-retail spread in prices, large price differences between regions for basic fresh produce and growing margins at the processor and retailer level.

An ongoing investigation by the commission found a staggering increase in the wholesale price of tomatoes.

The average price of tomatoes increased from R5.95 per kilogram in May 2022 to R12.48 per kilogram in July: a spike of 109% in two months.

The good news is that South Africans might have already experienced the worst of food inflation. Paul Makube, senior agricultural economist at FNB, told the country had “ridden the wave”, and that the main challenge ahead was the droughts in Europe and China.

The bad news? Makube warns that the recent outbreak of foot-and-mouth disease in local cattle may see a short-term spike in the price of red meat.

Vavi cited research this week suggesting that, even for middle-class professionals, salaries are now depleted within five days of landing in bank accounts.

There is a sense that wages are not increasing in line with inflation – and that sense is backed by data. Independent economist Elize Kruger says that, for three of the past five years, if the forecast for 2022 is used, average take-home pay did not keep up with inflation.

Kruger points to the BankservAfrica Take-home Pay Index (BTPI), which shows that the average nominal salary dropped from R15,570 in February 2022 to R14,600 in June 2022. The BTPI is calculated by dividing the total value of all salaries paid each month by the number of employees. Shergeran Naidoo, BankservAfrica’s head of stakeholder engagements, says June was the second consecutive month in which nominal salaries remained below the R15,000 mark, and that salaries were 1.8% lower compared with a year ago.

The unions say that the raising of interest rates by the South African Reserve Bank (SARB) is making servicing debt on housing and cars increasingly unaffordable, leading to billions in defaulted loans from local consumers in the past few months alone. The SARB has already raised interest rates by 200 basis points since November last year, moving the prime lending rate (the benchmark rate for bank loans) from 7.25% to its current level of 9%.

Unions are strongly opposed to further hikes in interest rates. But using interest rates in this manner is one of the only tools available to try to curb inflation. The generally accepted view is that inflation is the result of a gap opening up between the supply of goods and the demand for them. The SARB has to try to cool down the whole economy, by making cash more expensive so that supply can catch up with demand. There is, however, one positive from raising interest rates. Though it makes borrowing money more expensive, it improves returns for those looking to invest. That makes South Africa a more attractive investment destination – which could increase foreign inflows of cash and have a positive effect on the economy at large.