THE recent drop in the consumer price index for the Free State province which shed 0.3 percentage points from 6.2 percent in September to 5.5 percent in October could be short-lived as fuel prices might go up at the end of this month, an economic expert has said.
Central University of Technology (CUT) senior economics lecturer Mgcinazwe Zwane said the anticipated fuel increase of about 50c a litre could put a damper on prospects for a further drop in the inflation figure due to the knock-on effect.
He said it was therefore important for the country to continue finding innovative ways to reduce production costs so that prices of goods and services remain within affordable levels.
“It is definitely good news that the inflation rate came down in October, but we are not there yet,” Zwane told the Free State Times this week.
“The good news could come back to haunt us very soon.
“We still need to spend less on production and consumers should buy what they need and not what they want in order to save.”
Latest figures from Statistics South Africa (Stats SA) indicate that the headline or national inflation figure stood at 5.5 percent in October after easing 0.5 percentage points from 6.0 percent in September.
This means on average it increased by 0.2 percent between September and October this year.
Despite the drop in the provincial inflation rate, the Free State was one of the three provinces with an annual inflation rate higher than the headline inflation figure.
Limpopo had a rate of 5.7 percent while Gauteng recorded 5.6 percent.
Provinces with an annual inflation rate lower than or equal to headline inflation were the Western Cape at 5.5 percent, the Northern Cape with 5.3 percent, the Eastern Cape 5.2 percent, KwaZulu-Natal 5.1 percent, Mpumalanga 5.1 percent and the North West 4.5 percent.
Zwane said industry should play a more active role in boosting the economy and not leave everything to the government.
He said the government was currently the biggest employer with a huge salary bill yet it does not produce goods.
“We need to look into exports,” the CUT economics expert said.
“There are too many people employed in the service industry and, worse, most of the graduates coming out of universities are not carrying the necessary qualifications.
“The country needs more artisans, technicians and engineers so that we can boost production.”
According to Zwane, it is estimated that 80 percent of the population is consuming 47.9 percent of the goods produced in the country, meaning the country could be producing enough but not consuming enough.
“We are not buying our own goods,” he said.
“We are importing a lot and that is costly to the economy.
“If we boost the economy, it means there will be more goods available at affordable prices and more people would have jobs and can afford to buy the goods.”