Food, electricity and petrol prices are all going up – as South Africans keep getting poorer

The Pietermaritzburg Economic Justice and Dignity research group (PMBEJD) has criticised government and National Treasury for underspending on South Africa’s poorest and most vulnerable communities, at a time when money has never been tighter, and food, electricity and travel costs are rising.

In a review of the 2021 budget, the PMBEJD noted that its latest research shows the average cost of a household food basket is still above R4,000 a month. While this basket is more affordable than in January, it is significantly more expensive than six months ago.

While food prices have climbed over lockdown, government’s response, through the budget, has been to effectively cut – in real terms – grant payments, and ignore the calls for a higher national minimum wage.

The group said that the basket of core foods has increased above inflation (+5.6%), and further price hikes are coming from all sides:

  • Fuel levies are increasing by 27 cents per litre, which will have a knock-on effect on prices of all goods and services;
  • Electricity tariffs will be going up by 15.6%, with more hikes coming;
  • Taxi fares are expected to increase between 7% and 25%;
  • Food prices are expected to increase by as much as 10%, given all the factors in play.

Despite this, government has seemingly gone out of its way to do nothing to help the most vulnerable deal with what lies ahead.

Minimum wage

The minister of Employment and Labour recently announced a 4.5% increase on the NMW hourly rate.

While this is slightly above inflation, the PMBEJG argues that the baseline wage was already set extremely low, and is considered a “poverty wage”.

The 4.5% increment works out to be 93 cents an hour, R7.44 for an eight hour day, and if the full working-day month is worked, a R148.80 monthly increase.

“The annual increment and the baseline NMW are not enough for workers and their families for the 2021 term. CPI tracks backwards – it tells us what inflation was in the past; instead of adjusting wages forward, to projections of what inflation for low paid workers is likely to be in the coming 2021 term.

“The additional 93 cents per hour is likely to be gobbled up by the across the board increases in the cost of essential goods and services this year. Millions of South African workers will likely be poorer this year than they were last year,” the PMBEJD said.

Grants

The PMBEJD said that this habit of short-changing the poor was also cemented in the 2021 budget, noting the paltry 1.6% and 2.2% increases to the old age and child support grants, respectively.

“Families will, once again, not be able to afford the increases in expenses this year – but this time it is even worse because government could not even be bothered to set the grant increases in line with inflation.

“This decision will make the most vulnerable people in society even worse off,” the PMBEJD said.

It noted that 3.67 million pensioners currently rely on the old age grant. “They use this money directly in the economy and support not only themselves but children, and family members who receive low wages or who have lost their jobs.

“The 1.6% or R30 increment on the grant is a terrible insult; it is a disgrace and the elderly – and the families they support – are very angry,” it said.

The “intentional underspend” on child support has added insult to injury, PMBEJD said, pointing out that months of research has shown that children are suffering from hunger and malnutrition at record levels in the country – some 30% of boys and 25% of girls under the age of five.

“It is very hard to understand how, considering this evidence, that government has chosen to increase the child support grant by below the inflation rate, off a baseline which is already 21% below the Food Poverty Line and a whopping 35% below the average cost to feed a child a basic nutritious monthly diet,” it said.

What is government doing?

The research group said it rejects the government’s position of austerity, with the current deficit of 80.3% still off from global averages of around 100%, adding that there is room to spend, borrow and invest to ensure the economy weathers the harsh realities of the last year.

Instead, it said, government is choosing to slow down the economy, providing no stimulus, and working towards a surplus by 2024/25 – benefitting a few wealthy South Africans, but leaving the majority of citizens out in the cold.

“Where are we going? What is our political vision? Why is government choosing to intentionally underspend on millions of South African workers, mothers caring for children, children, and pensioners and public servants.

“How can we be alright that our government seems no longer to care if there is food on the table, if lights are on, or if homes are safe? Poverty will deepen and it will take us longer to climb out of the poverty traps that current policy decisions are leading us to,” it said.


Read: South Africa’s 2021 budget is already facing its first major challenge

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Food, electricity and petrol prices are all going up – as South Africans keep getting poorer