I listened to a tobacconist from Cape Town on the radio on my way to work. He described how the government’s cigarette advertising restrictions have shrunk his sales over the past few years.
On Tuesday, a group of small retailers in Cape Town convened to raise their concerns on the same matter.
The argument is that since the Department of Health’s new tobacco regulations will force them to place all tobacco products, including snuff, pipes, matches and everything in between, on a 1m2 area for general retailers and 4m2 for tobacconists, it will damage their ability to trade.
This tobacconist on the radio feared that these restrictions could cut his sales by half and eventually force him out of business.
According to survey results published in the South African Medical Journal in September last year, the government’s tobacco control strategies have led to a gradual reduction in cigarette use among school learners in South Africa.
Smoking prevalence among pupils declined by 26.5 percent over the 12-year period in which the survey was conducted. This is a notable achievement on the part of the government and something to be applauded. After all, tobacco is one of the primary risk factors for chronic diseases, with a study published in The Lancet last year attributing up to a third of all deaths of South African adult males over the age of 35 to the product.
Sharp increases in cigarette prices played a role and so did the advertising and restaurant restrictions.
But one fact often underplayed is that people are becoming more informed and realise that the cons of smoking outweigh the pros and thus must make behavioural changes.
But one intriguing point the tobacconist raised was that of the illicit tobacco trade. Illicit traders take up about 25 percent of the total market. Shouldn’t this be an area of priority for the government?
Inflation
Deputy Reserve Bank governor Daniel Mminele was rather candid yesterday about the inflation outlook and you got the feeling that the cautious and conservative governor Gill Marcus might not have used as many words.
Mminele pointed out that the benchmark interest rate will need to rise to curb an inflation rate that is “uncomfortably high”, and that inflation “risks continue to be tilted to the upside”.
His words come as the central bank faces a policy dilemma as inflation exceeds the 6 percent ceiling of its target range while the economy contracted in the three months through March.
The central bank left its benchmark repo rate unchanged at 5.5 percent at the last two meetings of the monetary policy committee.
The acceleration of inflation to 6.6 percent last month exceeded expectations and the figure may remain outside the target for an extended period, Mminele said. This reflects the impact of the rand’s depreciation on consumer prices.
“The current rate cycle need not match the speed and magnitude of earlier cycles.”
Compare that with Marcus’s statement on June 10 that the last interest rate increase was not a “one-off move” and raising the benchmark rate by 25 basis points is certainly a possibility.
Like former finance minister Pravin Gordhan, Marcus’s old school demeanour wouldn’t allow for the in-your-face, these-are-the-facts dissemination of such information. Gordhan must have really drilled Finance Minister Nhlanhla Nene on the tone of presenting the facts.
Yesterday, Nene reiterated the position that South Africa’s economy is unlikely to go into recession, even after a 0.6 percent contraction in the first quarter, as data pointed to a rebound in the mining and manufacturing sectors.
I can’t exactly see Marcus hauling Mminele up by the ear but I do imagine she has a word or two to of advice about the tone of his speech.
Edited by Peter DeIonno. With contributions from Londiwe Buthelezi and Banele Ginindza.