COSATU welcomes inflation rate drop but warns economy not out of the woods

28 June 2024

The Congress of South African Trade Unions welcomes the positive decrease in the inflation rate from 5.1% in April to 4.6% in May. 

This will help ease the pressure on millions of workers struggling to take care of their families and cope with the rising costs of living as well as cushion them slightly from electricity, water and municipal tariffs due to go up on 1 July. It will also enable consumers to spend more in the local economy and thus spur growth.

It is critical as inflation slows down, that the Reserve Bank provide relief to consumers and the economy by lowering the repo rate which has been steady at a painfully high 8.25%. This will help reduce the costs of servicing home loans for millions. Consumers have struggled with the 475 basis points hike to the repo rate over the past two years.

The pending drop in the fuel prices in July of R1 per litre of petrol and 30 cents for diesel is additional welcome news for workers, commuters and the economy.  Whilst welcoming this relief, the economy will not be out of the woods anytime soon with the marginal drop in GDP earlier this month and a 0.6% drop in employment figures. 

It is key that Treasury honour its commitment to see where fuel taxes can be reduced as well as continue efforts to ensure Eskom is able to provide reliable and affordable electricity, and becomes less dependent on unaffordable double digit tariff hikes. Similar progress is needed to ensure all Metro Rail lines are fully operational thus providing cheaper public transport for millions of commuters.  Equally, more support is needed for Transnet to reduce costs of transporting food to the retail sector. 

COSATU urges the government of national unity to move with speed to remove blockages to unlocking the economy as soon as Cabinet is appointed.   

Issued by Zanele Sabela, COSATU National Spokesperson, 28 June 2024