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[File image] Hand flipping wooden cube block to change between up and down with percentage sign symbol for increase and decrease financial interest rate.
Finance Minister Enoch Godongwana says the reduction of the inflation target to 3% will reduce the cost of living and borrowing for households.
He announced the reduction when he tabled the 2025 Medium Term Budget Policy Statement (MTBPS) in Parliament yesterday.
The new target has immediately replaced the previous target range of between 3%and 6%.
It will be implemented over the next two years.
Independent analyst Khaya Sithole says, “If you have rands, if you have units of South African currency, the question of the value of that currency and what it enables you to do or buy, for example, is an important one. So if inflation is high, it simply means that whatever you have in your pocket does not stretch as far as it should.”
“So we do need inflation to be contained. But that doesn’t mean that we want the alternative. So the alternative is deflation. When you have deflation, you have a circumstance where actually those who even have money, then question … what’s the point of keeping this particular currency because we’re not seeing this particular growth,” adds Sithole.
