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South Africans urged to go on spending diet

Increases in food, petrol, electricity & interest rates are on the cards in coming months.

Canal Walk Shopping Centre in Cape Town. Picture: Thomas Holder/EWN.

JOHANNESBURG - South Africans have been urged to go on a spending diet with further increases in food, petrol, electricity and interest rates on the cards in coming months.

Consumer prices increased by 1.4 percent between January and February this year and some economists believe there could be a further hike in the next few months.

Economists urged consumers to start budgeting and with prices going up, lifestyle changes may be necessary to keep South Africans out of debt.

The latest Consumer Price Index figures have already been felt by consumers and the situation could get worse.

Financial journalist and author Maya Fischer-French said higher inflation cannot be avoided.

"Understand where your money is going and also start to stretch that budget. I've gone on a spending diet. I've decided that I'm not going to make no impulsive purchases for the next three months."

South Africans have also been encouraged to renegotiate their insurance premiums, anticipate interest rate hikes and start paying more towards their bonds and cut back on luxuries.

NO SIGN OF IMMEDIATE RELIEF

There's more evidence that food prices are rising quickly after the drought through the summer.

Food prices jumped by 8.6 percent year on year.

Agri-SA economist Thabi Nkosi says it's going to be a long time before food prices stop rising so quickly.

"A number of factors need to be put in place for us to see some relief on the food price front. We have been hearing a lot of climatologist have talking about another season of very bad weather, so we are not very hopeful about them coming down in the near future."

PETROL PRICE HIKE

The CPI for last month was 7 percent, up by 0.8 percent in January.

The latest data shows that food and non-alcoholic drinks increased by 1.1 percent in January to 1.3 percent in February.

Economist Lesiba Mothata said this puts more strain on consumers.

"The pace of this acceleration is concerning, it is expected. We do expect inflation to go up, but at this rate it really is not something that has been priced into markets and soon you may find that bond yields begin to respond with this deterioration in inflation expectation."

Motorists were also warned to brace themselves for a fuel price hike.

Economists predict an increase of between 70 and 80 cents per litre next month, if the rand and oil prices remain at current levels.

A 30 cents per litre hike in the fuel levy will also come into effect in April.