Swazi Observer

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GOVT ADVISED TO ENSURE INFLATION RATES REMAIN LOW

By Hlengiwe Ndlovu | 2018-02-23

WITH the country’s inflation levels on a downward trend since the beginning of the year, around 4.7 per cent as compared to December which scored a 4.9 per cent, government has been advised to take serious measures to maintain the low rates.

SARFED Regional Coordinator George Choongwa said despite the country having a small decline margin of about 0.2 per cent, government can take serious measures to ensure that this downward trend is maintained for a considerably longer period.

He said it is important that the country reaches the desired four per cent inflation rate as the 0.7 per cent demonstrates an additional commitment to price controls in order to achieve economic optional levels of efficiency.

He also noted that in the past twelve months, food prices have remained volatile in the country as compared to other sectors.

Choongwa explained that the benefits associated with decreased inflation levels are plenty, one of which is lies in the microeconomic side which promotes positive consumer behaviour in the long run.

better

“The point is that when inflation is low, consumers and businesses are better able to make long-range plans because they know that the purchasing power of their money will hold and will not be steadily eroded year after year,” he said, adding that this form of development does not only attract local investment from the perspective of business sector, but also brings about increase in the currency’s purchasing power.

investment

“However, we expect government to put investment at the core of this economic opportunity since economic stability and investments were two sides of a coin,” he said, also pointing out the need for the country to diversify investment patterns in order to main economic stability.

He said the second benefit of decreased inflation levels is that it ensures steady growth for local businesses.

“This is based on the notion that if businesses and individuals are confident that inflation is under long-term control, they do not react as quickly to short-term price pressures by seeking to raise prices and wages. This would however, contribute to stable business growth trends”.

Choongwa said civil servants also stand to benefit from reduced inflation levels in the sense that the interest rates are reduced, making them enjoy the privilege of borrowing money at reduced rates for easy acquisition of durable goods such as land and houses through mortgage.

He, however, decried the fact that in Swaziland, most civil servants are in crisis from perpetual debt which might make most of them unable to fully enjoy the reduction in inflation levels.

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