Following a bleak budget update from the finance minister this week, the only bit of good news for South African consumers right now is that there probably won’t be a big increase in the petrol price next month – in fact, signs point to a possible drop.
This is according to economist Dawie Roodt, who said that current data from the department of energy points to a flat petrol price in November – but this still depends on how the rand exchange rate and the crude oil price performs.
“At most we are probably looking at an increase of around 3-5 cents a litre – but the most likely scenario is that the price will remain constant,” Roodt said.
The Central Energy Fund’s data as at 24 October 2018 shows that there is a 3 cent over-recovery in the price of both 93 octane and 95 octane petrol, which means motorists are likely to see a 3 cent drop in the price.
However, things are still looking negative for diesel, where the CEF reports a 35 cents to 38 cents under-recovery in the price.
December is another story altogether, Roodt said, with the United States continuing to threaten plans to cut off Iranian oil exports and oil markets fluctuating world-wide.
According to Neil Roets, CEO of Debt Rescue, it is highly likely that the local currency would weaken further against the US Dollar and that the price of crude was going to spike before the end of the month – but seasonal changes in the northern hemisphere would have an impact on prices looking ahead to December.
“The northern hemisphere is entering autumn which is when consumers fill up their heating oil tanks causing demand to spike. This, coupled to pending oil sanctions against Iran, is going to increase demand causing prices to increase,” he said.
Consumer debt critical
Roets noted that indebted consumers were facing critical times in South Africa, with his company seeing a 20% spike in the number of clients it has received in the past six months.
“We have never seen the likes of the number of over-indebted consumers seeking help from debt counsellors as we are seeing now,” he said.
The debt expert added that data from Pick n Pay corroborated this trend, with the group reporting that consumers have taken up R200 million of the R1 billion the supermarket giant had made available to its store card credit facility.
“The harsh reality is that people now have to make use of credit to feed themselves and their families,” he said.
“About the only good news coming out of the economy today is the fact that the latest calculation shows that fuel is unlikely to rise next month.”