<\/p>\n
South Africans know inflation as a number announced by Statistics South Africa and tracked by the Reserve Bank. Fuel rises. Bread rises. The repo rate rises. Then, everyone asks the same question: When will interest rates come down?<\/p>\n
But, the next inflation test may not start in Pretoria, Sandton, or Washington. It may start in the Pacific Ocean, where El Ni\u00f1o changes rainfall patterns; in the Strait of Hormuz, where energy and fertiliser shipments become vulnerable; and on farms, where producers must decide whether they can afford fertiliser for the next season.<\/p>\n
Read\/listen:
Inflation jumps to almost two-year high in May
Jeremy\u2019s weekly wrap: Fitch upgrades SA, but drought and Eskom test outlook
From day zero to El Ni\u00f1o, the next drought could be worse than we think<\/p>\n
That is the uncomfortable lesson from recent global warnings about food, energy, and the weather. Inflation is no longer only a demand problem. It is increasingly a resilience problem.<\/p>\n
A central bank can raise interest rates to cool spending. It can protect credibility. It can prevent a temporary shock from becoming a wage-price spiral. That matters.<\/p>\n
\nBut, a central bank cannot make rain fall, repair a port, lower fertiliser prices, fix rail lines, stabilise electricity supply, or make diesel cheaper. Monetary policy can reduce appetite. It cannot increase harvests.<\/p>\n<\/blockquote>\n
This is where South Africa\u2019s debate becomes too shallow.<\/p>\n
Government debt\u00a0<\/strong><\/p>\n
\n\nADVERTISEMENT<\/p>\n
CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n
We argue about whether government debt is good or bad, as if all borrowing is economically identical. It is not. Borrowing to fund waste, bailouts, and permanent consumption weakens a country.<\/p>\n
\nBorrowing to build productive capacity can strengthen it. One kind of debt eats the future. The other may enlarge it.<\/p>\n<\/blockquote>\n
Investors understand this better than politicians do. Bond markets do not automatically hate debt. They hate debt that cannot explain how it will be repaid. They hate debt that buys no growth, creates no assets, and leaves no stronger economy behind. But, borrowing for electricity, water, ports, rail lines, logistics, digital infrastructure, and climate resilience can be different. If it raises productive capacity, lowers future costs, and crowds in private investment, it changes the story.<\/p>\n
Read\/listen:
South Africa secures first Fitch rating upgrade since 2005
Africa\u2019s debt penalty: What happens when the music stops
Johannesburg woes deepen as key French funder rejects loan request<\/p>\nRepeat shocks\u00a0<\/strong><\/p>\n
This matters because the world is becoming a factory of repeated shocks. A pandemic was called temporary. Russia\u2019s invasion of Ukraine created a temporary energy and fertiliser shock. The Middle East conflict creates another temporary oil shock.<\/p>\n
El Ni\u00f1o creates a temporary food shock. But, when temporary shocks arrive one after another, they stop feeling temporary to households. They become the new cost of living.<\/p>\n
\nFor SA, that matters deeply. We are not only exposed to global food and fuel prices. We have added domestic fragility to global volatility.<\/p>\n<\/blockquote>\n
When rail fails, food and minerals move by road at a higher cost. When electricity is unreliable, producers buy backup power. When water systems decay, farms and factories carry more risk.<\/p>\n
\n\nADVERTISEMENT:<\/p>\n
CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n
When municipalities break down, companies build private versions of public services. These costs do not disappear. They are quietly priced into bread, insurance, rent, school fees, medical bills, and retirement plans.<\/p>\n
That is why the inflation discussion cannot end with the repo rate. A country does not become financially well by punishing demand every time supply fails. It becomes financially well by building systems that make the next shock less expensive.<\/p>\n
This is also the real lesson behind the artificial intelligence investment boom and the global race for infrastructure. Capital is flowing towards economies and companies that can power, compute, transport, defend, and adapt. The future will reward those who build capacity before the crisis, not those who explain why the crisis was unpredictable afterwards.<\/p>\n
Read:
Traders cut SA rate-hike bets on Iran peace deal
The world is no longer rewarding stories, it is rewarding capacity<\/p>\nSA still has enormous strengths: Strong farmers, sophisticated financial markets, private-sector capability, valuable minerals, and a credible central bank. But, credibility without capacity is not enough. We cannot \u2018interest rate\u2019 our way out of broken logistics, weak municipalities, climate change, and underinvestment.<\/p>\n
The next inflation shock may arrive through food. Or oil. Or the rand. Or the weather. The exact trigger is uncertain. The lesson is not. In a more volatile world, resilience is not a luxury. It is the cheapest form of inflation protection.<\/p>\n
Dr Francois Stofberg is a financial well-being economist at the Efficient Group.<\/i><\/p>\n<\/p><\/div>\n
#SAs #inflation #shock #rain #fall<\/p>\n","protected":false},"excerpt":{"rendered":"
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