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So reckons Tony Clarke, MD of Rawson Properties, citing the floods which have hit agriculture in eight of South Africa’s nine provinces as the major culprit.
 
Some 3% of South Africa’s gross domestic product is, said Clarke, generated by the agricultural, fishing and forestry sector and the country is a major producer of maize, soya beans, wheat, fruit and wine, all of which have at some point been affected by the floods.
 
“This means that by the middle of 2011 the country will be short of these products which, in turn, will lead to price rises and a general increase in inflation.  Inevitably then the SA Reserve Bank will counter this by raising its rates. 
 
“We will see at least a 50 to100 base points rise in the rate before year end 2011,” said Clarke.
 
South Africans, he said should take cognisance of this now adjust their budgets and ensure that they are in a position to service and maintain their bonds, treating this as their number one priority in their budgeting – and initiating higher monthly payments now before they become obligatory.
 
Among those who are paying off homes, he added, there is a tendency to extend the loan as long as possible rather than to shrink it.  This, in his view, is because they see certain extras and luxuries as essential to their lifestyles when they could easily do without them.
Publisher: eProp
Source: RPG