1995 - National Treasury

-1.3-
the fourth quarter of 1993 and 9,2 per cent in the
first quarter of 1994, before accelerating rather
sharply to 13,8 per cent in the second quarter.
Bonuses paid to certain categories of workers in
the public sector and special allowances granted
to those who had to perform additional duties over
the election period were the main reasons for the
acceleration in average labour remuneration in the
second quarter of 1994.
The rise in the average nominal remuneration per
worker in 1993 fell below the rise in output prices,
resulting in a decline of 0,1 per cent in the ratio of
nominal wages to output prices. This downward
adjustment signals a further lowering of inflationary
pressures in the economy.
Average output per worker rose by 3,3 per cent in
1993 and continued to increase at year-on-year
rates of 4,1 per cent in the first quarter of 1994
and 3,1 per cent in the second quarter. The combined
effect of rising output per worker and a
decline in the real labour cost per worker was a
slight decline in the share of the total value of
output allocated to labour from 61 per cent in
1993 to 6OV2 per cent in 1994. The ratio of 6OV2
per cent is still well above the average ratio of
57 1 /2 per cent during the years from 1970 to 1989.
1.1.6 Inflation
Significant gains have been made in the fight
against inflation. The rise in consumer prices
slowed down from 15,3 per cent in 1991 to 9,7
per cent in 1993, and in 1994 inflation fell to 9,0
per cent. The measured inflation in 1994 could
have been even lower if food prices had not risen
rapidly during the course of the year. Measured
over twelve months the overall consumer price
index increased by 7,1 per cent in April 1994 - its
lowest rate of increase since November 1972.
The mid-year increase in food prices then caused
the twelve-month change in the index to accelerate
to 10,1 per cent in September before it
slowed down again to 9,9 per cent in November
and December. The influence of the higher food
prices on the general consumer price inflation is
evident from the rise in the consumer price index
excluding the category food and non-alcoholic
beverages, which increased from 6,6 per cent in
April 1994 to 7,9 per cent in December.
The rate of increase in the production price index
- often a leading indicator of the future inflationary
trend - declined from 15,2 per cent in 1989 to 6,6
per cent in 1993, but then accelerated to 8,2 per
cent in 1994. Measured over twelve months, the
increase in the all-goods production price index
fell below 10 per cent in November 1991 and has
since been mostly in the single digit region. A low
point of 5,4 per cent was reached in October
1993, but the twelve-month increase in production
prices then accelerated to 10,1 per cent in
September 1994. More recently, inflation in production
prices over twelve months fell back to 9,4
per cent in November 1994 and 9,7 per cent in
December, mainly because of the strengthening of
the nominal effective exchange rate of the rand
and the return to a normal level of food supply
which slowed down increases in food prices.
1.1.7 Balance of payments
A series of nine annual surpluses on the current
account of the balance of payments came to an
end in 1994. For 1994 as a whole a deficit was
recorded, estimated at R2.1 billion which represents
a significant turnaround from the surplus of
R5,8 billion in 1993. Deficits were recorded in the
third and fourth quarters of 1994.
The reversal in the balance of payments in 1994
was primarily brought about by a substantial
increase in the volume of merchandise imports
which rose by 17 1 /2 per cent in 1994. Import
prices advanced by 8V2 per cent resulting in a rise
in the aggregate merchandise import bill of 27 per
cent in 1994.
Disruptions in domestic production in the first half
of 1994 had a dampening effect on the growth in
the real value of merchandise exports. For the
year as a whole the volume of merchandise
exports increased by 5 per cent, which fell short of
preliminary estimates of the growth in the real
value of world trade, indicating that South Africa's
relative share in global trade declined in 1994.
Higher international commodity prices along with
a decline over the year in the nominal effective
exchange rate of the rand caused export prices to
increase by 12 per cent and the value of merchandise
exports by 17 1 /2 per cent.