The Democratic Union has called for the elimination of VAT on more food items ahead of next Wednesday’s midterm budget report.

This comes as inflation in South Africa slowed for a second straight month on Tuesday (October 19), according to data from Statistics South Africa – but food prices continued to rise.

Consumer price inflation increased to 7.5% year-on-year in September 2022, from 7.6% the previous year. Luigi Marinus, portfolio manager at PPS Investments, noted that inflation is currently averaging 6.7% for calendar year 2022 so far, well above the upper end of the target range.

Monthly inflation rose 0.1%, compared with a 0.2% increase the previous month, StatsSA said.

Transportation has remained a major contributor to inflation over the past year, as it has been every month this year except for January, which coincided with Russia’s invasion of Ukraine in February.

Other significant contributors to inflation during the year were food and non-alcoholic beverages (2.0%), housing and utilities (1.0%), noted Marinus.

“As has been the case in recent months, all 11 inflationary groups have increased in price year-on-year. Food and public transport, which are key factors in inflation for many South African consumers, recorded increases of 11.9% and 22.1% respectively on the year, a partly due to the side effect of a 34.1% increase in fuel prices.

Scrap VAT

DA Finance Portfolio Manager, Dr Dion George says many South Africans, especially the poorest, struggle to get food on the table due to the food cost crisis.

George requested the removal of VAT on more food items typically purchased by the bottom 50% of households, such as:

• Boneless chicken;

• Beef;

• Canned beans;

• Wheat flour;

• Margarine;

• Peanut butter;

• Baby food;

• Tea;

• Coffee;

• Soup powder.

“This will help poor households stretch their food budgets even further and allow them to buy more nutritious food.”

“We specifically appealed to Minister Godongwana for boneless chicken and other types of chicken commonly purchased by low-income households. The boneless chicken will cost about R3 billion, but experts say the intervention will be effective through improving health, work and school results.

“Bonned chicken is by far the most popular source of high-quality protein for low-income households, accounting for 14% of low-income households’ food budgets. South Africans. Poor people need a high-quality protein source to avoid George: “Switch to a less nutritious high-carb diet when your budget is tight.

The DA calls on the Secretary of the Treasury to announce cuts in import duties on pasta and other types of chicken purchased by very poor households, such as chicken. “This will provide substantial relief to the poorest households while the tax impact is negligible.”

The political party also urged the Minister to reduce fuel taxes to reduce transport costs. “The fuel tax cuts will mean more money for household food budgets and lower food costs, as high food transportation costs have driven up food prices,” says George.

“The fuel tax cuts can be accomplished by reducing corruption and wasteful spending, reallocating funds such as VIP protection budgets, and opening the economy to growth.”

DA pointed out a survey conducted by Debt Relief found that 81% of households skip at least one meal daily while 41% say they can no longer feed their family.

“This hunger crisis harms our society in terrible ways. At least 27% of South African children under 5 years of age are stunted due to malnutrition. Millions of students cannot concentrate and study. Worker productivity suffers and our society is increasingly unstable,” said George.

“Minister Godongwana can easily pay for these hunger relief measures if he curbs ministerial waste and promotes economic reforms to develop our economy for jobs, growth and income,” said the politician.

South Africa’s VAT regime already includes 19 basic foods that are rated zero to help limit the impact of VAT on poorer households.

Food without VAT in South Africa

• Whole wheat bread;

• Cornmeal;

• samples;

• Sticky rice;

• Dry powder;

• Dried beans;

• Lentils;

• Canned sardines / sardines;

• Milk powder;

• Milk powder;

• Rice;

• Vegetables;

• Fruits;

• Vegetable oils;

• Milk;

• Fermented milk;

• Brown wheat semolina;

• Eggs;

• Edible beans and legumes.

More Jobs

Bloomberg reports that slowing inflation over the past two months will not prevent the central bank from raising interest rates in November,

Policymakers raised policy rates by 275 basis points cumulative copy since November to 6.25%, Bloomberg said. The key interest rate implicit path from the central bank’s quarterly forecasting model, which the MPC uses as a guide, indicated in September that the benchmark would be at 5.6% by year-end.

This suggests that the committee has focused on the fight against inflation and there may be room to cool down the nation’s port growth cycle, hampering economic growth.

The main drivers of inflation in September were food and transportation. Core inflation, which excludes volatile items such as food and fuel, rose from 4.4% to 4.7%, suggesting underlying price pressures are building. Governor of

Lesetja Kganyago said in an interview with Johannesburg-based eNCA television on Tuesday that borrowing costs will only be lowered as inflation falls toward the midpoint of the target range. consumption is maintained.

“Once you see inflation back on target and closer to 4.5%, that’s what we’re really targeting, that will tell you the interest rate cycle has done its job. of it,” he declared. “If this is fine, it is time to adjust the policy.

Marinus of PPS Investments said while inflation remains above the upper end of its target range, the 7.5% figure is in line with consensus and below recent peaks. “The market is likely to assume that we have seen the peak of inflation and that the trend will decrease going forward.

“The Reserve Bank of South Africa’s hawkish stance will continue as South African and global inflation remains high and therefore further rate hikes can be expected before year-end.