South African Reserve Bank Governor Lesetja Kganyago. Picture: Simphiwe Mbokazi
South African Reserve Bank Governor Lesetja Kganyago says there was hope that inflation may come down in the third quarter of the year and this could lead to lower interest rates.
Kganyago said they were aware South Africans were feeling the pinch in increases in interest rates over the last few months with their disposable income shrinking.
But there were global and domestic factors that have driven the inflation to go up.
He also said load shedding has not helped the situation.
He said if South Africa did not have load shedding the economy would have grown by 2.3%.
He also said load shedding has led to food producers to dispose of some of their foodstuff and they passed on the cost to the consumers.
Kganyago, who was speaking on Metro FM on Tuesday, said they have to arrest the increase in inflation rate.
Last July the inflation was 7.8% and this year it was sitting at 6.2%.
The governor said they hoped the inflation was going to decline further in the third quarter and this would lead to lower interest rates.
“What we want to see is inflation declining on the way to our target range. Our estimates are that in the second or third quarter of this year it will be within the target and after that we expect that it will decline.
“Our inflation picked in July last year to 7.8% and we are expecting that in the second or third quarter of this year it will decline and it will be within the target range,” said Kganyago.
On load shedding he said government was taking measures to lower the stages of load shedding.
There were a number of renewable projects that were in the pipeline and they will need to be connected to the grid.
Minister of Kgosientsho Ramokgopa said they will need to invest more than R200 billion in transmission lines.
Eskom would need to build 14 000km of transmission lines by 2032. At the moment Eskom was building an average 300km of transmission lines a year.
Ramokgopa said they need to ramp up this programme to ensure they expand transmission lines as they expect more renewable projects to be connected to the grid.
siyabonga.mkhwanazi@inl.co.za
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