Politics

The extreme rise in the cost of living requires smart money moves



Winter brings with it plummeting temperatures and rising costs. As usual, the cold weather demands additional heating and more food to stay warm. But while the temperature is dropping, everything else is going up – the prices of fuel, gas, municipal utilities, transport and food are at an all-time high.

The record increase in fuel, gas and food is partly due to the war between Russia and Ukraine – Russia supplies a large portion of the world’s liquefied gas products, while Ukraine is a major producer of wheat, a critical component in most of our staple foods. All in, this has resulted in the price of liquefied gas increasing by an average of 30%, fuel by more than 40% – breaching the R20 a litre mark for the first time – while electricity has risen by 14% and transport by 16.8% in the past year.

The past two years have not been kind to consumers – the impact of Covid-19 has seen thousands lose their jobs and salaries have shrunk for most South Africans. What’s more, the South African Reserve Bank recently increased interest rates by 50 basis points. This fourth consecutive hike brings the current prime interest rate to 7.5%, piling more pressure on a population already under financial stress.

The effect of the massive rise in living costs is hard for consumers. Budgets that are already tight need to be tightened even further to manage the impact of these cost increases on their pockets.

Consumers need to reorganise their budget instead of using savings or emergency funds to make up the shortfall.

The best place to start is to relook at your spending on things that are not essential, such as entertainment, eating out or buying takeaways – before you buy something ask yourself if it is really a ‘must have’ or ‘nice to have’. There are also practical things you can do: to save on electricity, keep the lights on only in areas that you are using, switch off your geyser during the day and only use your car for essential travel.

Bank fees – a bugbear for many South Africans – can end up costing hundreds of rand a month. Yet with new digital banking options available, customers pay low to no fees on most transactions. Cutting back on bank fees is easy to do and the money can go towards your grocery bill instead.

 

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