Inflation and wages

Here and there are rays of light in the darkness that show that pressure on prices is starting to decrease – though analysts are expecting July’s inflation number that will be announced this week, to be even higher. Yet, by almost September, consumers are under pressure, production is decreasing, commodity prices have started to fall, and we are even paying a little less for petrol. People are holding their breath that we might make a soft landing where prices start to fall before the economy shrinks too much, but last week the Reserve Bank poured some cold water on us. They are naturally concerned that the shocks to fuel and food prices will expand into a sustained process of increases in wages and prices and they explained this in Parliament on Wednesday. * The Economics Minute is supported by the NWU Business School.