Consumers face double blow as inflation rises and rate fears return

South Africans could face rising living and borrowing costs after inflation accelerated sharply in April, raising questions over whether interest rate hikes can curb price pressures increasingly driven by global fuel shocks rather than domestic demand. Consumer inflation rose to 4% in April from 3.1% in March, according to figures released by Statistics South Africa on Wednesday. The increase returns headline inflation to the midpoint of the South African Reserve Bank’s target range of 3% to 6% after several months of softer inflation readings. Although inflation remains within the Reserve Bank’s formal target range, economists say the speed of the increase and the geopolitical pressures behind it are likely to raise concern about the outlook for interest rates. For households already struggling with expensive debt repayments, high transport costs and weak income growth, the fear is that rising prices could now be followed by a tougher interest rate environment. Daniel Meyer, professor of economic policy and public management, governance and public policy at the University of Johannesburg, said the latest increase had been expected because of rising global fuel prices and warned that higher interest rates would do little to contain inflation driven mainly by external pressures. “The inflation increase was expected because of fuel price increases across the globe and in South Africa. It’s a cost pressure environment, not a demand-side environment,” Meyer said. His argument goes to the centre of a growing debate around inflation and monetary policy in South Africa. Unlike demand-driven inflation, where strong consumer spending pushes prices higher, Meyer argues the current inflationary pressure is being imported through fuel prices, global instability and currency weakness. That distinction matters because interest rate hikes are generally more effective at slowing consumer demand than dealing with inflation caused by oil prices or external shocks. Meyer said consumer