EDITORIAL | Creativity is key in trying to cope with high cost of living

Our economy is bleeding. Consumer confidence is at its lowest in 35 years, barring the Covid-19 lockdown level five period. According to the FNB/BER index released yesterday, it had plunged to -25 in the second quarter, across all income groups. This after having already slipped from -9 to -13 index points in the first quarter of the year. 

FNB chief economist Mamello Matikinca-Ngwenya said the dramatic deterioration in consumer sentiment signalled a marked slowdown in willingness to spend in the coming months. This would mean a significant slowdown in consumer spending growth. The latest Household Affordability Index shows the average cost of a goods basket for basic food and personal hygiene items is nearly 14% more than a year ago. Public transport fares are set to rise in July and the annual electricity hikes will come into effect in the same month, not to mention another increase in the petrol price. Inflation is at a five-year high and the SA Reserve Bank is set to make a decision on an increase in the repo rate at its next meeting.

All of this sets the scene for suffering and our state is battling as much as private citizens to cope. Unemployment Insurance Fund (UIF) commissioner Teboho Maruping on Wednesday warned its kitty is getting depleted, with Covid-19 Ters payouts denting its coffers in the past two years. “I’m concerned, if the economy continues not to pick up in terms of creating jobs, creating entrepreneurs and companies surviving, it is going to affect the UIF kitty. Sooner or later the UIF will run out of funds. It is a concern that we and exco engage about,” said Maruping.

(Teboho) Maruping’s warning the UIF may run out of funds should be regarded as a bright, flashing red light — a priority to address.

For now, there is about R120bn in UIF coffers, down from R160bn before the onset of Covid-19. A helpline to many South Africans, the UIF proved its immense value during the economic devastation sowed by the pandemic. Maruping’s warning the UIF may run out of funds should be regarded as a bright, flashing red light — a priority to address.

On a positive note, though, Maruping said UIF contributions were picking up again after a dip, with an increase seen over the past six months. This means we are slowly starting to recover from Covid-19's destruction. But now we are dealing with new financial frustrations. Yet, despite so many factors stacked against us, there still are entrepreneurial South Africans who just do not give up. This week, we reported on a waiter bouncing back from lockdown unemployment and poverty to launch SA’s first “Afripolitan” lunch-box service — low-cost meals for those who can’t afford expensive restaurants or just want a taste of home. We also wrote about the 2022 annual Township CX Report that showed our townships are quietly giving rise to a burgeoning economy.

So while we battle low consumer confidence and rising food and petrol costs, South Africans are coming up with creative ways to cope. Our government institutions should be doing the same — starting with finding new ways to support entrepreneurs as much as possible, as well as keeping the UIF, a crucial support system, as stable as possible.