Interest rates ease, but food, energy costs keep pressure on consumers

SOUTH Africans may be breathing a little easier following the South African Reserve Bank's (SARB) latest decision to cut the repo rate by 0.25%, but financial experts caution that the relief is limited and household budgets remain under pressure.

- ASHLEY LECHMAN

The repo rate, which dictates what commercial banks pay when borrowing from the SARB, dropped on August 1, bringing lending rates down slightly from recent highs.

This means that consumers with loans or credit facilities should see a small easing in their monthly repayments.

“The rate reduction is welcome news, but it does not mean the financial pressures facing many households have disappeared,” said Sarah Nicholson, customer experience and platform manager at JustMoney.co.za, a platform that helps South Africans make good money choices.

Nicholson pointed out that while the prime lending rate now sits at 10.5%, not everyone benefits equally.

“Clients with lower credit scores or higher perceived risk are offered rates significantly above this. Every day household expenses also continue to bite. If you feel your grocery bill is creeping up every month, you’re not imagining it,” Nicholson said.

According to Statistics South Africa’s Consumer Price Index (CPI), food and energy costs have risen sharply.