Economy / General

Looming agriculture profit margin pressures ahead as the rate hike cycle resumes

The South African Reserve Bank (SARB) followed on its previous warnings that it would not hesitate to hike rates if the inflation trajectory carried on the current path to the upside. The SARB raised its repo rate by 0.25% to 3.75% effective from the 19th of November 2021. The bad news is that the SARB’s projections indicate further increases in the next three years to 2024 which is cumulatively 300 basis points.

Rate hike by SARB is a sign that economic recovery is underway

Following the South African Reserve Bank’s (SARB’s) decision to increase its repo rate by 0.25%, FNB will also lift its prime lending rate by 0.25%. The new rate will take effect on all prime-linked accounts from Friday 19 November 2021.

CPI for October 2021

Consumer price inflation increased by 5.0% year-on-year as at the end of October 2021, which was unchanged from the previous month. Inflation now averages 4.3% for the first 10 months of 2021 compares to the 3.3% average in 2020. Month-on-month inflation saw a modest 0.2% increase which also matched the month-on-month increase for September.

2021 Medium-Term Budget Policy Statement: initial reaction