While the petrol price is only going up by 1 cent a litre in August, this will bring little relief to deeply indebted consumers in South Africa – with worse still likely to come.
This is according to Dawie Roodt, chief economist at Efficient Group, who says that September will bring with it not just Spring but also a substantial hike in the prices of petrol, diesel and illuminating paraffin.
“If we see this against the background of South Africa’s spiralling unemployment and rising levels of poverty as well as the fact that growing numbers of protestors are taking to the streets we are looking at serious problems for President Cyril Ramaphosa down the road,” Roodt said.
This is how the petrol price will change in August:
- 95 and 93 ULP – 1 cent increase;
- Diesel – 4 cents decrease;
- Illuminating Paraffin – 4 cents increase.
|Fuel||July official||August official|
|0.05% Diesel (wholesale)||R14.45||R14.41|
Neil Roets, CEO of Debt Rescue, said the fact that the fuel price remained largely stable would spare consumers from the impact of another double digit increase, but he was of the view that this was merely a temporary respite.
“Depending on how the currency performs over the next month, and given that there is strong pressure by oil producing countries for a hike in the price of crude, we could be looking at double digit increases again in September,” Roets said.
“Growing civil unrest has also become a fact of life adding yet another negative factor to the growing plethora of economic pressure points making life ever harder for working men and women.
“Given South Africa’s continuing junk status classification by the major ratings agencies, the local economy and hard-pressed consumers in particular, are in trouble,” Roets said.
“More people are arriving late for work because of protestors closing roads with burning tyres and shutting down Prasa’s rail network by burning entire trains. Some are even losing their jobs because of frequently clocking in late.”
Roets added that the downgrading of GDP growth by Reserve Bank governor Lesetja Kganyago from 1.7% to 1.2% was deeply troubling, showing clearly that there were no reasonable prospects for any meaningful growth this year.
“The government is between a rock and a hard place as state spending is spiralling while tax receipts are dwindling. It is also now becoming clear just how ruinous state capture was and the enormous damage it did to the economy.”
Roets said Debt Rescue and most other debt counselling firms were showing double digit growth rates because so many more consumers were getting into trouble and were compelled to seek relief by going under debt review.
“That has become pretty much their last resort to hold on to the few possessions that have not as yet been grabbed by predatory debt collectors,” he said.
“We have gone way past the point where consumers who aspire to join the ranks of the middle class can dream of achieving that goal.
“The new aspiration is to put sufficient food on the table to avoid family members going to bed hungry and the latest round of price increases are going to substantially aggravate that situation.”