The South African Reserve Bank (SARB) said in a statement that the electricity crisis in South Africa is contributing significantly to inflationary pressures.
South Africa’s power outage has contributed to an increase in the Consumer Price Index (CPI) from 0.6% in 2022 to 1.1% in 2023.
In the past months, power outages in South Africa have been at an all-time high. This is due to power cuts by the state-owned electricity company Eskom after numerous blackouts have taken a toll on its generating capacity.
The power crisis has resulted in a loss of working hours in the industrial, commercial, and agricultural sectors of up to 14%, the SARB said.
The power cuts are costly for companies that use alternative energy sources such as diesel generators to get around the cuts caused by load shedding. 67% of companies use this alternative.
Thus, the cost of the generator is 133% higher than the cost of electricity supplied by the national grid, which has a direct impact on consumers, contributing directly to inflation.