The cost-of-living crisis
IN SA and several other countries around the world people have been seeing the prices of food, petrol and electricity increase, but their salaries haven’t risen to the same level.
A report from the World Bank says South Africa is the most unequal country in the world, with some of the highest rates of poverty and inequality when it comes to people’s incomes.
SA’s deputy minister of finance, David Masondo, told a parliamentary committee earlier this year that “much of what’s been affected is wheat, maize and oil supplies.
“The increase in the price of these household staples has added to inflation and reduced the disposable income of consumers”.
WHAT’S CAUSED THE CRISIS?
There are many reasons why prices have risen. Part of it has to do with an increased demand for fossil fuels such as oil and gas, which has meant energy prices have gone up.
The war between Russia and Ukraine has also played a major role.
Aside from needing electricity for lights and all the devices in our homes, businesses also need energy to produce and transport their items.
This ends up costing business much more, which then also affects the cost for customers when they buy the products.
WHY ARE PRICES GOING UP?
The rising cost of goods and services is called inflation.
This is caused over a period when prices rise but the amount of money people have to spend decreases.
Some companies are also struggling with the aftereffects of the pandemic, which negatively affected businesses during lockdown.
Another reason is that the value of a country’s currency can either go up or down depending on the demand for it.
Investors around the world can lose confidence in a country if the economy isn’t growing sufficiently and then pull out their investments or put a stop to their plans to invest in a country. This can cause that country’s currency to lose its value – so everything a country imports, from food to fridges, costs consumers more.