By Lehlohonolo Lehana.
Minister in The Presidency, Khumbudzo Ntshavheni says the cabinet committee is going to consider interventions to moderate fuel price increases is likely to turn its attention to electricity tariffs amid growing fears of another steep hike in 2025.
Responding to questions during a post-Cabinet briefing, Ntshavheni said Cabinet was aware of growing anxiety over impending applications to the regulator that could, if approved, result in electricity increases of between 36% and 44% next year.
“In this current enviroment it is not ideal to have exorbitant tariff [increases], “she said, confirming that the Cabinet committee had been given a brief to address South Africa’s high cost of living.
Ahead of the May elections, President Cyril Ramaphosa indicated that government was investigating ways to cushion South Africans from the effects of rising food and fuel prices, including through making changes to the Basic Fuel Price formula.
In his Opening of Parliament address, he then confirmed that the Government of National Unity had agreed that tackling the high cost of living would be one of its key priorities, alongside efforts to grow the economy, increase job creation and reduce poverty.
Ntshavheni said that the Cabinet committee would seek to make recommendations on selected cost drivers individually and that it would, thus, finalise its work on fuel pricing before turning its attention to another area.
“I’m confident that when we are done with the focus on fuel, we will then also move to focus on electricity.”
Her statement followed the release of the latest consumer price inflation print indicating that inflation had moderated to 4.6% in July, partly because of slowing food price inflation.
It also coincided with moves by some municipalities, opposition political parties and civil society organisation to resist any major electricity tariff hike, including a signature campaign launched by the Democratic Alliance.
Although Eskom and the National Transmission Company South Africa (NTCSA) are yet to make their formal submissions to the National Energy Regulator of South Africa (Nersa), it has been reported that they will be seeking allowable revenue of R446-billion for 2025/26, which would translate to a 36% hike for direct customers.
44th Ordinary SADC Summit
Cabinet has welcomed the outcomes of the 44th Ordinary SADC Summit of Heads of State and Government held in Harare, Zimbabwe, on 17 August 2024.
The Summit had amongst others, urged Member States to implement the SADC Regional Humanitarian Appeal to the El Niño-induced drought and floods, and to continue monitoring weather and climate risks, including the forecasted La Niña event, and develop contingency measures to mitigate the impact of disasters.
The Summit also took note of the coming into effect of the Agreement establishing the Tripartite Free Trade Area among the COMESA, the East African Community and SADC which will provide opportunities for SADC members to tap into an expanded market of 26 countries with a population of about 700 million and a gross domestic product of US$1 trillion.
“On the Israel war against Palestinian, the Summit noted with concern the continuing relentless attack on civilians in Palestine which has resulted in the loss of lives, destruction of property and deteriorating humanitarian conditions and called for an immediate ceasefire, the release of all hostages and the commencement of talks to bring a lasting solution to the conflict,” said Ntshavheni.
Southern African Railways Association (SARA) Conference
Cabinet has also welcomed the deliberations during the 13th SARA Conference to uplift the rail sector within the Southern African Development Community (SADC) with an aim of facilitating greater trade within the region and take advantage of trade opportunities presented by the African Continental Free Trade Area.
Cabinet said a thriving SADC rail industry requires greater rail investment and collaboration within the SADC region to address its many challenges.
“The region’s rail industry has over the years been faced with challenges such as crime, theft and vandalism.
“South Africa is committed to doing its part to create an efficient, connected and modern rail sector, and is implementing policy and interventions, such as the Freight Logistics Roadmap, to revive, support and modernise the capacity and competence of our railways,” Ntshavheni added.
Inclusive economy
Ntshavheni has reiterated the government’s dedication to its top priority of fostering an inclusive economy that creates jobs.
said the steady growth seen in manufacturing is a confidence booster on work to build a production economy.
This follows the rise in the official unemployment rate to 33.5% in the second quarter of 2024 which is an increase of 0.6 % points from the 32.9% recorded in the first quarter.
Employment decreased by 92 000 to 16.7 million in the second quarter of 2024. The number of unemployed persons increased by 158 000 to 8.4 million during the same quarter.
The Minister highlighted that an analysis of employment by industry reveals a decrease in the number of employed individuals within five of the ten industries between quarter one of 2024 and quarter two of 2024.
Employment decreases were mainly in the Trade (110 000), Agriculture (45 000), and Private households (18 000) industries.
However, the largest increases in employment were recorded in Manufacturing (49 000) and Community and Social Services (36 000).
“The steady growth in the manufacturing [sector] is a confidence booster on work to build a production economy. Government remains focused on its apex priority of building an inclusive economy that creates jobs,” Ntshavheni said.
Inflation
Meanwhile, Cabinet has noted the annual consumer price inflation (CPI) which has dropped to 4.6% in July from 5.1% in June 2024. The CPI increased by 0,4% month-on-month in July 2024.
The main contributors to the 4.6% annual inflation rate were:
• Housing and duties (increased by 5.3% year-on-year and contributed 1.3 percentage points)
• Miscellaneous goods and services (increased by 7.0% year-on- year and contributed 1.0 percentage point),
• Food and non-alcoholic beverages (increased by 4.5% year-on-year and contributed 0.8% of a percentage point), and
• Transport (increased by 4.2% year-on-year and contributed 0.6 of a percentage point).
In July 2024, the annual inflation rate of goods was 4.6%, down from 5.5% in June 2024, and Services was 4.7% up from 4.6 in June 2024.