Sameera Casmod | sameerac@radioislam.co.za
22 November 2024 | 12:26 CAT
4-minute read

Decline in inflation to 2,8% in October 2024

The annual consumer price inflation dipped from 3,8% in September to 2,8% in October 2024, the lowest since June 2020 when the rate was 2,2%.

The drop marks a decrease in inflation for the fifth consecutive time due to lower goods prices, a stronger rand and cheaper oil compared to last year.

Additionally, Stats SA says the primary reason for the slowdown in the rate of price increases is mainly due to falling fuel prices, which declined by 5,3%.

The Monetary Policy Committee (MPC) lowered the repurchase rate from 8% to 7.75%, which means the prime lending rate will decrease from 11,5% to 11,25%.

While analysts expected the repo rate to be reduced by 50 basis points, the 25 bp cut signals that the MPC is being conservative due to global economics. With Trump having won the US election earlier this month, the rand weakened past R18/$ and there is increasing uncertainty about the impact of his victory on the global economy.

Speaking to Radio Islam International for this week’s ASRI Report, Muhammad Cajee said that the MPC conservative reduction in the repo rate ties in with Governor of the South African Reserve Bank Lesetja Kganyago’s efforts to balance the inflation and repo rates.

“The governor has been quite conservative on inflation and he’s been arguing with government that the inflation target should be lower. It should be 2 to 4%, while the current target is 3 to 6%. And in that context, the Monetary Policy Committee is managing inflation with the repo rate in a way that is between 2 to 4%,” Cajee, executive director at ASRI, said.

Cajee highlighted the austerity with which the South African government has managed inflation, particularly when compared to Zimbabwe, Turkey and the UK- all of whom are struggling to unwind their inflation spiral. Cutting the inflation rate and being cautious with the repo rate is a good move, Cajee says, and avoids a “hot money scenario of high indebtedness in the society”.

China announces tariff-free market access for least developed countries (LDCs)

Xi Jin Ping made the announcement during his G20 speech on Monday. The zero-tariff policy means that China will not impose import duties on goods from LDCs that have diplomatic relations with China.

The policy aims to boost China’s commitment to increase trade relations with at least 43 LDCs, 33 of which are African countries. The announcement is resultant of the FOCAC summit held in September 2024 and will enable LDCs to access China’s market- a move that is expected to give Beijing more influence in global trade and lower shipping costs from parts of Asia and Africa.

The announcement is in stark contrast to Trump’s plan to impose nearly 40% tariffs on imports from China in early 2025 and signals China’s quest to expand its position as a leader on the global stage.

“The US were supposedly a big purveyor of free market policy, so the shift from Donald Trump is interesting because it means America’s becoming more protectionist: they want to focus inward,” Cajee observed.

While China has focused on internal investment over the past 2 decades, the United States spent R20 trillion ($800 billion) per annum on military and international escapades, “burning cash in Iraq, Afghanistan, Syria, Libya and in the last year with the genocide in Gaza,” according to Cajee.

China’s middle class grew from 3,1% of the population in 2000 to 50,8% in 2018, constituting nearly 707 million people. The growth of the middle class could lead to a shift in China’s growth pattern from investment- and export-led to consumption-led, presenting the primary reason for the zero-tariff policy.

“The zero-tariff trade [policy] to 45 developing countries is not necessarily just from the goodness of their hearts although there might be a component of that. Trade is an international political instrument,” Cajee explained, adding that the Asian nation’s policy indicates its continued shift away from the US/western axis.

As China vies with the US for power, it remains to be seen whether the objective will be the advancement of its people or a self-serving quest for global domination.

SACP threatens to breakway

South Africa has its own local representatives of the Marxist-Leninist dogma — the South African Communist Party (SACP). Recently, the SACP has been signalling its dissatisfaction with the Government of National Unity (GNU) and hinting at the possibility of breaking away. Adding fuel to this leftist landscape, the EFF’s Julius Malema finds himself embroiled in both internal turmoil and conflict with the Umkhonto we Sizwe (MK) Party.

Post-election dynamics have exposed significant challenges for the EFF. The party’s growth stagnated, and it lost ground to MK, leading to a wave of departures among its founding members. High-profile exits include Dali Mpofu and Floyd Shivambu, the EFF’s deputy president and founding chairperson, respectively. These developments, initially predicted to unfold over a longer period, have accelerated within months, throwing the party into crisis mode.

Amid this, Malema faces pressing questions about leadership within his party, including who will succeed as deputy president. Speculation centres on Godrich Gardee, although the suspension of popular party member Mbuiseni Ndlozi from attending Congress has raised eyebrows, hinting at internal discord.

On the SACP side, the organisation is preparing for its December conference, with discussions about breaking ties with the EFF reigniting. These debates aren’t new but reflect the party’s ongoing struggle to reclaim relevance in a shifting political landscape. Analysts argue for a unification of the left to create a coherent alternative in South Africa’s political spectrum.

This presents an intriguing possibility: a strategic alliance between the SACP and the EFF. The SACP, plagued by declining influence and membership, could benefit from the EFF’s mass support base. In turn, the EFF might gain ideological clarity from the SACP, addressing criticisms of its inconsistency. Such a partnership would position them to the left of the ANC, challenging both the ruling party and the rising MK.

If this alignment materialises, South Africa’s political landscape could undergo a notable transformation. The DA would anchor the right, the ANC would occupy the centre or centre-left, the EFF and SACP would consolidate the left, and MK would claim the far-left. This ideological diversity could finally fill the gap left by social democrats, a space long dominated by the ANC.

The upcoming conferences of the SACP and EFF are critical moments to watch. December could signal a redefined left in South African politics, with the potential to reshape electoral dynamics.

Listen to the ASRI Report on Sabaahul Muslim with Moulana Sulaimaan Ravat.