THE RISING COST OF inflation

We're all feeling the impact of inflation, so we've roped in the experts to offer us some insight, tips and advice as we navigate these trying financial times.

- THOBEKA PHANYEKO

WE CAN ALL AGREE THAT there's a cost-of-living crisis, and as we try to stay afloat, it's important to understand how inflation affects living standards. FNB Senior Economist, Koketso Mano enlightens that the world has suffered from a post-lockdown cost-of-living crisis driven initially by supply-demand misalignment and exacerbated by the war in Ukraine. "Supply chain bottlenecks have since subsided, but inflationary headwinds persist. These headwinds include tight labour markets in advanced economies like the US, climate change, as well as the reconfiguration of investments and business operations in attempts to strengthen post-pandemic supply chains and in response to escalated geopolitical tensions." Furthermore, these global factors have spilled over to South Africa's inflation dynamics through the ports and have been compounded by a weaker rand. Tighter global financial conditions and rising debt vulnerabilities have generally lifted the risk associated with emerging markets assets, weighing on currencies. "In addition, the rand has suffered from political risks and stunted growth given crippling infrastructure constraints. As a result, the rand has underperformed relative to peer currencies. The weaker rand, failing infrastructure, and poor service delivery has lifted the cost of operating and living in South Africa, worsening SA's inflation trajectory," she says.

Glamour: In light of this, what are the three main factors that contribute to inflation?

Koketso Mano: Generally speaking, supply-demand misalignment (supply shortages or excess demand) across the globe, a weak exchange rate, and poor service delivery that pushes businesses and households to procure or augment basic services privately.