Director’s Cut: Dawie Roodt - “Inflation is a process. We must fight it.”

South Africa’s top monetary voice, Dawie Roodt, says cutting inflation to 3% changes everything - interest rates, debt, the currency and even how businesses price their products. But there’s a catch. Roodt warns that the Reserve Bank cannot do it alone, and that politicians, municipalities and state-owned entities will fight the shift because high inflation hides their mistakes and pays their debt. He argues that if South Africans refuse unjustified price hikes, “we protect our money instead of letting it lose value.”.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.South Africans are tired of paying more for everything. We fight about petrol, panic at the price of milk, and complain when our electricity bill looks like a ransom note. So when the South African Reserve Bank announced a new 3 percent inflation target, many jumped to one conclusion. This must mean cheaper living. Right?Not quite. And according to Efficient Group chief economist Dawie Roodt, this shift is far bigger than petrol prices or food specials. He believes this could become one of the most important economic decisions South Africa has taken in decades. But only if the public understands the responsibility that comes with it.Speaking to BizNews, Roodt’s eyes lit up the moment the word inflation was mentioned. He joked that he gets up in the morning for two things. Money and prices. Not because he loves spending it. But because of what money can teach us about how a country really works.He explained something many of us never think about. Inflation is not something that simply happens to us. It is not a petrol increase. It is not food going up. It is a process that starts with money losing value. Too much money pumped into the system, government spending without discipline, and political pressure to increase salaries without productivity. Those are the real causes of inflation.And that is why it matters so much that South Africa has now formally set the target at 3 percent. Not 3 to 6 percent. Not somewhere in the middle. Not according to how angry unions are in any given year. A clear number. Something the public can measure and use to push back.Roodt reminds us of the fight behind the scenes. It was not a friendly handshake between Treasury and the Reserve Bank. The governor of the Reserve Bank, Lesetja Kganyago, had been telling the world for years that 3 percent should be the true goal. Even when the official range was still 3 to 6. It did not sit well with politicians. It is the finance minister’s job to set the target. And lowering it has consequences that Treasury would rather avoid.Why? Because inflation benefits politicians. Not you. Not pensioners. Not savers. Inflation eats debt. And government has mountains of debt. When inflation is high, the debt shrinks in real terms. This is why Roodt says politicians prefer short-term pain avoidance over long-term discipline. They think only up to the next election. Low inflation forces government to live within its means. It forces a reduction in waste. It forces accountability.By pushing the country to a 3 percent target, the Reserve Bank essentially backed Treasury into a corner. And despite the initial resistance, South Africans stand to benefit if the country sticks with it.But here comes the uncomfortable part. A 3 percent target is not just the government’s responsibility. It becomes ours too. If Eskom tries to increase tariffs by 12 percent, Roodt says we must refuse to accept it. If a municipality wants a 15 percent rates increase because of years of mismanagement, we must refuse to accept it. In a 3 percent inflation world, the only way a business, a union, a worker or a state entity can justify a price or salary increase is by proving they have added value. More productivity. More efficiency. A real improvement. Not excuses.Inflation hides bad behaviour. When all prices rise together, you cannot see who is failing. You cannot see the real mistakes. You only feel poorer. That is why hitting a low inflation target is one of the most effective ways to expose waste, corruption and incompetence. It is economic sunlight.Another overlooked benefit sits in our wallets. Low inflation brings lower interest rates. It also stabilises the rand. Without a stable currency, foreign investors avoid us. They do not fear South African bonds or equities. They fear the rand collapsing before they can take their money out. If they believe our inflation will stay low, they believe our currency will not go wild. We become far less risky.South Africa is already seeing the first results. Bond yields have dropped. The government is paying less to borrow. And as Roodt points out, every rand saved on interest can be spent on real things. Infrastructure. Schools. Hospitals. Not debt.But Roodt issues a final warning. This can only work if South Africans stop acting like inflation is a natural disaster. It is now on the public to refuse unjustified increases. Whether it is school fees, union wage demands, property rates, or electricity bills, the question must always be the same. What value has increased? If the answer is none, then 3 percent becomes a shield we all have the right to use.South Africa has paid the painful price of high interest rates to force inflation down. According to Roodt, the worst of the pain is behind us. Now comes the payoff. If we protect it.

Director’s Cut: Dawie Roodt - “Inflation is a process. We must fight it.”

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