{"id":795288,"date":"2024-10-14T10:44:06","date_gmt":"2024-10-14T08:44:06","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=795288"},"modified":"2024-10-14T10:44:10","modified_gmt":"2024-10-14T08:44:10","slug":"financial-pressure-eases-in-south-africa-but-there-is-a-catch","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/industry-news\/795288\/financial-pressure-eases-in-south-africa-but-there-is-a-catch\/","title":{"rendered":"Financial pressure eases in South Africa \u2013 But there is a catch"},"content":{"rendered":"\n<p>Financial pressures on South Africans are beginning to ease, allowing households more room to breathe.<\/p>\n\n\n\n<p>The Consumer Price Inflation (CPI) Index dipped below 5% in July 2024 for the first time in years, giving South Africans more purchasing power.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/www.looksee.co.za\/?cid=EP_uWd28&amp;utm_source=BusinessTech&amp;utm_medium=Article&amp;utm_term=October2024\">Click here to learn more about LookSee\u2019s solar offerings<\/a><\/strong><\/li>\n<\/ul>\n\n\n\n<p>Additional respite was given in the form of the South African Reserve Bank (SARB) lowering the repo rate by 25 basis points to 8% in September 2024.<\/p>\n\n\n\n<p>By dropping the repo rate, the SARB has effectively reduced the cost of repaying debt like home loans, vehicle finance, personal loans, credit cards, and more.<\/p>\n\n\n\n<p>Economists anticipate <strong><a href=\"https:\/\/businesstech.co.za\/news\/finance\/793528\/good-news-for-interest-rates-in-south-africa-what-to-expect\/?utm_source=BusinessTech&amp;utm_medium=Article&amp;utm_term=October2024\">a further 125 basis points in interest rate cuts<\/a><\/strong> by the end of March 2026 \u2013 potentially bringing the repo rate down as low as 6.75%.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Electricity tariffs buck the trend<\/strong><\/h3>\n\n\n\n<p>Despite these positive financial trends in South Africa, one major problem still remains for consumers: Eskom continues to push NERSA for significant electricity tariff increases.<\/p>\n\n\n\n<p>Eskom recently submitted its revenue application for the 2026, 2027, and 2028 financial years, and is requesting electricity tariff increases far above inflation.<\/p>\n\n\n\n<p>These proposed tariff increases are detailed below.<\/p>\n\n\n\n<p><strong>Direct customers:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>FY 2025\/26 \u2013 36.15%<\/li>\n\n\n\n<li>FY 2026\/27 \u2013 11.81%<\/li>\n\n\n\n<li>FY 2027\/28 \u2013 9.1%<\/li>\n<\/ul>\n\n\n\n<p><strong>Wholesale prices to municipalities and local authorities:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>FY 2025\/26 \u2013 43.55%<\/li>\n\n\n\n<li>FY 2026\/27 \u2013 3.36%<\/li>\n\n\n\n<li>FY 2027\/28 \u2013 11.07%<\/li>\n<\/ul>\n\n\n\n<p>These increases would result in a compounded increase of 66.08% over three years for direct customers, and 64.79% for municipalities.<\/p>\n\n\n\n<p>While it is unclear whether NERSA will grant these increases, the fact that Eskom is requesting them points to more electricity price pain ahead.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Protecting against electricity prices<\/strong><\/h3>\n\n\n\n<p>Marc du Plessis, Executive Head of LookSee, recommends that South Africans use the savings they are currently enjoying thanks to lower interest rates and household costs to protect themselves against future electricity tariff hikes.<\/p>\n\n\n\n<p>\u201cIt\u2019s been a tough few years for household finances, but now we\u2019re entering a cycle where reduced inflation, interest rates and even fuel prices will free up some disposable income,\u201d said du Plessis.<\/p>\n\n\n\n<p>\u201cFamilies need to remember, however, that above-inflation electricity tariff hikes could quickly put budgets back under pressure.\u201d<\/p>\n\n\n\n<p>Du Plessis said that investing in solar solutions is a great way to protect yourself against these increasing electricity tariffs.<\/p>\n\n\n\n<p>He said that while households initially prioritised solar installations to fight load-shedding, they are now a critical cost-cutting measure.<\/p>\n\n\n\n<p>\u201cThe savings on monthly electricity bills can be used to cover most of the finance repayments of solar solutions, and once the loan is paid off the savings go straight back into your budget,\u201d said du Plessis.<\/p>\n\n\n\n<p>For those that want to start small, converting your electric geyser to get power from solar panels will save most families more on their electricity bill than the loan repayment.<\/p>\n\n\n\n<p>\u201cThe average household spends between 40% and 50% of their electricity bill on geyser heating, so this affordable intervention can have a significant long-term impact on your budget,\u201d said du Plessis.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Huge opportunity<\/strong><\/h3>\n\n\n\n<p>There is no better time than now to reinvest your disposable income into a solar installation \u2013 as LookSee\u2019s Solar Loan product will end in February 2025.<\/p>\n\n\n\n<p>The Solar Loan offers much lower interest rates than a personal loan, starting at prime +1% and capping out at prime +2.5%.<\/p>\n\n\n\n<p>With the repo rate predicted to drop in the coming months, this will also contribute towards you paying less interest on your Solar Loan over time.<\/p>\n\n\n\n<p>When you add in the fact that solar system components have dropped in price by up to 30% since the beginning of 2024, switching to solar is now a no-brainer.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.looksee.co.za\/products-services\/solarloan?cid=EP_XyGB3&amp;utm_source=BusinessTech&amp;utm_medium=Article&amp;utm_term=October2024\" target=\"_blank\" rel=\"noreferrer noopener\">Click here to learn more about LookSee\u2019s Solar Loan product.<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>South Africa\u2019s CPI and interest rates are both decreasing \u2013 but electricity prices remain a major problem in the country.<\/p>\n","protected":false},"author":57,"featured_media":795289,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10459],"tags":[13718],"class_list":["post-795288","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry-news","tag-looksee"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/795288","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/57"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=795288"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/795288\/revisions"}],"predecessor-version":[{"id":795296,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/795288\/revisions\/795296"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/795289"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=795288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=795288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=795288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}