[TOP STORY] Smaller turkeys on the Christmas table?

0:00Money web now on the money. This podcast is brought to you by a stand-lib asset management, invest in more certainty to navigate volatile market conditions. Telling you about John Lewis, independent economist, John appreciate the time. I know you put out talking around the lack of a resolution to the Middle East conflict and sort of posing risks to the year end, festive spending that we typically see in South Africa, Wednesday saw petrol up 134 cents diesel around 3,000. This is perhaps the single biggest concern and in that it directly removes money from the consumers pocket. We're traveling and it's just costing more and immediately it hurts and that is going to put pressure in the immediate and down the line. Simon, I think I'd hope for a resolution to the conflict by now and significantly lower oil prices, but we're not seeing it. I'm going to include this morning at 95, when I last looked, I think. And possible further petrol price hikes to come next month.

1:02It's early days though. But I think this is the problem. This whole conflict affects us in three different ways. First, there's a global growth impact. The IMF does forecast slow global growth for this year than last year. That can affect our export demand for our exports and affect our economy and job creation. That's the first direct impact. Then of course there's the direct inflation. We impact. We see it at the pump prices. That's coming through. And then the general inflation, the impact of that, which can lead to interest rate hiking. And I think the saw will hike one further by another 25 basis points. So that takes the serviceable income out by increasing the cost of servicing debt. So there's a triple whammy. It doesn't mean recession and disaster. But it just looks more and more like as we move towards festive season consumer spend. That might be flat lining by the end of the year. If we don't get a resolution to this conflict fairly soon.

2:04We got the hike from Sab in May 25 points. That was largely expected. Inflation peak to five. It's down at 4.3. But I think the true part about inflation is its volatile and remains well above the 3% target. Two meetings left this year, one later this month, one in November. And you're saying you're fairly confident. I mean, I'm not sure Sab has any choice yet. They want to remain relevant to the process. Inflation is going to be well outside the target. They might have paused at the last meeting. But it does look like one of those meetings is going to be a hike. And I think maybe the sooner rather than the later one. Yeah, I'd just have to say exactly when they're high quality. But I do believe that one of the meetings there will be a hike. I think that's what we could see in when we get the next month's inflation numbers. We could see a rise again. It came down from five to 4.3%. Because you're on your capital price inflation slowed quite dramatically a month or two ago. But now that's reversed again. So you could see CPI inflation ticking up higher than the 4.3%.

3:07And then yes, that's probably the time I think for the sob to hike another time. You're so I mean, I am still looking at around 3% global growth for the year. But a lot of that on AI investment boom, which I'm not sure how much that Christians us. I mean, we don't have much AI here. It is fairly concentrated, you know, HVAC suppliers and and you know, daughter centers and the like. And we might not get much impact from that. As you say, our front maybe not recession, but but that growth is going to be lacking. Yeah, I mean, you know, if we look at export driven sectors already, I mean manufacturing sectors in recession and the latest PMI new sales orders index, which is a leading indicates for the economy was down to 40 odd. Mining output growth in recent months has turned negative after a previous period of solid growth. Yeah. So those are heavily export dependent sectors and they're not looking good at the moment. So I think there is some negative impact from the world economy possibly starting to filter into our numbers.

4:11And as you say, well, not not only do we not benefit hugely from the AI investment boom, but that too. There's a lot of speculation as to whether that's in the bubble now on that chickens might come home to roost their fairly soon. So that's an uncertain environment in itself. It's not just about the Iran war. So the global the global economic environment is not in our favor. I don't think at the moment. Last question, household consumption last year 3.6% growth. You're looking for 1.6 this year. What disappears first from the spending? I mean, I imagine it's discretionary. It's going to be travel it may be going to be holidays. It might be smaller turkeys on the Christmas table. I mean, households are going to be making stock decisions and they're going to be finding those discretionary items and cutting or reducing. Yeah, and I think I think the discretionary will firstly the credit dependence demand. You know, the vehicle sales and the housing demand. I mean, that often normally slows when interest rates go up. So you see an impact there. But yes, when it comes to the discretionary spending.

5:13So holiday spending growth might be on holiday related spending growth might be under pressure because it's transport cost related. And that filters through to tourism accommodation to a certain degree. But then it's also postponable spending that that work that you wanted to do on your house. We're already seeing hardware retail sales in negative territory. That you can you can often live in your your house that needs a bit of repair for a bit longer. So postponables can also take a bit of a backseat during times like this. So I think that's what we're starting to see play out in some of these spending categories already. And probably more of that towards the end of the year. Postponables I hadn't thought of that of a sector but absolutely there's stuff which we can say hey, that can happen later. We'll leave it there John Lewis and depending on the economists appreciate the early morning time. This podcast is brought to you by a stand-lib asset management. Invest in more certainty to navigate volatile market conditions.