Middle class squeezed mercilessly

GDP growth not adequate to offset skyrocketing food prices and utilities costs in South Africa

- TRACY-LYNN RUITERS

SOUTH Africa’s middle class is under attack with rising food prices, rates and taxes and ever-increasing municipal levies that are forcing middle-income households to the brink.

While Stats SA revealed that the gross domestic product (GDP) grew by 0.8% in the second quarter of this year, some economists said this is not necessarily good news for the middle class.

“For the middle class, I’m afraid this is not good news. And it’s not good news because the population is growing at approximately 1.5%. An economy that’s growing less than 1% is just not keeping up with population growth,” said economist Dawie Roodt.

“So I'm afraid, no, this is just not good enough. It is slightly better than I’ve expected, but we need to make some serious changes to all sorts of things in the economy before we can get the economy growing at a rate that will support population growth. So, yeah, better than expected, but still not good enough.”

Municipalities are relying more and more on middle-income households to fund budget shortfalls by increasing rates and taxes and introducing a range of levies.

In Cape Town, this amounts to R4800 a year in levies, which ratepayer organisations have now taken the City to court for.

Sandra Dickson from the activist group STOP COCT said the relentless increases in food, fuel, electricity, and municipal tariffs means households don’t feel any relief, even though the economy grew by 0.8%.

“This is underlined by members of STOP COCT complaining daily about how difficult it is to make ends meet and to pay bills. The uncomfortable truth is that while the government points to GDP growth as “progress,” ordinary South Africans still face a rising cost of living that outpaces the real benefits of that growth.