EFF statement on the reported September inflation figures by Statistics South Africa
23 October 2024
The Economic Freedom Fighters (EFF) welcomes the recent consumer price inflation figures released by Statistics South Africa, indicating a further decline from 4.4% in August 2024 to 3.8% in September 2024. This marks the lowest inflation rate since March 2021, when inflation stood at 3.2%, and continues to reflect the sustained downward trend in consumer price inflation.
These figures confirm what the EFF has long argued: the inflationary pressures faced by South Africa are not demand-driven, but rather the result of systemic economic and global challenges that require a different monetary policy approach, and not blank regressive high interest regime.
The EFF continues to stand by its criticism of the South African Reserve Bank's misguided monetary policy. Since July 2022, when the repo rate was increased from 4.75% to 5.50%, followed by successive hikes, the Reserve Bank has pursued a path of economic strangulation, relying on outdated and orthodox monetary tools. This was done despite our calls for a more unconventional and inclusive approach, one that considers the devastating impacts of unemployment, inequality, and poverty on consumer demand.
The South African economy has remained stagnant, failing to achieve growth rates above 2% in any meaningful quarter over the past decade, except briefly after the relaxation of COVID-19 restrictions. This lack of growth is not due to new economic activities, but rather a recovery from government-imposed lockdowns. Meanwhile, high unemployment, widespread poverty, and deep economic inequality persist, contributing to a deteriorating economic landscape.
Banks, on the other hand, have reported record profits, benefiting from the high interest rate regime that has pushed many working-class South Africans into unsustainable debt.
Executive bosses have reaped unimaginable bonuses, while profits have been transferred through dividends to foreign shareholders, further entrenching inequality. No new factories are being built, no significant job creation is taking place, and ordinary South Africans are left to bear the brunt of these policies.
The EFF once again calls on the South African Reserve Bank and the Monetary Policy Committee to take more decisive action. While the 25 basis point cut in September, bringing the repo rate to 8%, is a step in the right direction, it is insufficient given the severe damage that high interest rates have inflicted on the economy. The EFF criticised this timid reduction and maintains that there was ample room for a more substantial cut, had the Committee fully appreciated the extent to which high interest rates are exacerbating job losses, eroding assets, and placing an unbearable financial strain on the working class.
The inflation figures released today further validate our position that the high interest rate regime was misguided from the beginning. Inflation was never driven by excessive demand, and consumers have been punished unnecessarily to benefit the banking sector.
Banks have amassed significant profits in an economy characterised by high levels of unemployment, poverty, and racial inequality.
It is also worth noting that the slight stabilisation of Eskom has played a role in curbing inflation, with the government seemingly pulling back from its reckless plans to decommission power stations. While this may offer some temporary relief, it does not absolve the Monetary Policy Committee from its responsibility to act boldly and decisively in the interest of the broader economy.
The EFF calls for an end to this unemployment-inducing, growth-stifling monetary policy.
It is time for the Reserve Bank to adopt a more progressive, responsive, and inclusive approach that addresses the real economic challenges facing our people. The failure to do so will only prolong the suffering of the working class and further deepen the economic crisis in South Africa.
Issued by Leigh-Ann Mathys, National Spokesperson, EFF, 23 October 2024
