How much you could be paying for a car in South Africa in 10 years’ time

The variability of inflation is a huge challenge for budgeting.

This is according to Old Mutual’s latest long-term prospective report, which highlights that, despite the fact that SA’s inflation measurement and calculation is among the best in the world, it is still just an average of across all consumers in the country.

“If your expenditure is more skewed towards components in the basket of goods with very high inflation rates (for instance, education and healthcare), you will experience a much higher personal inflation rate than the country average. In this case, you will need to save more for future expense,” Old Mutual said.

To show the effects of inflation, Old Mutual published an example of how the cost of a car, one year’s tuition, and private hospital costs are set to increase in the country based on average inflation rates:

Working backwards, it’s also possible to demonstrate the effects of inflation from the 1970’s up until the present day.

Older South Africans will know just how much they were able to stretch their rands in the past, with a Spur steak selling for just 50 cents 40 years ago – while you could buy a can of condensed milk for just 10 cents.

“Similarly, 10 years ago, you would have paid almost half of what it costs today for a basket of consumer goods,” Old Mutual said.

“Twenty years ago it would have cost R325 to fill your trolley, compared to the mere R5 of 80 years ago.”


The other major consideration when considering the ‘cost’ of inflation is what the rand will be worth when you retire, said Old Mutual.

“If your retirement income does not at least grow in line with inflation, you will either experience a decline in your standard of living or you will run out of money.

“At a 6% inflation rate, a fixed monthly retirement income of R10,000 a month today will decline in real terms to about R1,700 a month after 30 years. Chart 12 shows your purchasing power is even worse at a higher inflation rate.

“This highlights how important it is to plan carefully and ensure that you invest to achieve inflation-beating returns in the long run,” it said.

Read: Rand takes a hit against the dollar

Must Read

Partner Content

Show comments

Trending Now

Follow Us

How much you could be paying for a car in South Africa in 10 years’ time