The escalation in inflation was caused mainly by the depreciation of the rand, by sharp rises in food prices, by rising interest rates and also by a rise in the unit labour costs per unit of production.
In this situation, however, it is imperative that the rate of increase in the money supply will be constrained, which requires a meaningful slow-down in the rate of increase in bank credit extension. Last year, the M3 money supply rose by 13.6 per cent, and total bank credit extended to the private sector by 16.1 per cent.