Although the petrol price is ‘only’ expected to rise by about 7 cents a litre in June, the general economic outlook remains bleak.
This is according to Dawie Roodt, chief economist at the Efficient Group, who said that consumer debt and unemployment are set to climb.
As such consumers should tighten their belts and brace themselves for difficult times ahead, he said.
“All of the main economic indicators that we track show that things are going to get a lot more difficult before there is any chance of light at the end of the tunnel,” he said.
“With Eskom’s debt approaching R500-billion and the utility failing to sell enough electricity to cover its daily expenditures, it is going to be incumbent on consumers to keep it from imploding and sinking the country’s entire economy.”
With a variety of taxes now chewing up 53% of the fuel tax, consumers should brace themselves for the introduction of the carbon tax in June which is going to add 9 cents a litre to the petrol price and 12 cents a litre to the cost of diesel, Roodt said.
R20 a litre by the end of the year?
Neil Roets, CEO of Debt Rescue, said consumers should brace themselves for increasingly tough times ahead.
“In most cases, budgets are stretched to the limit and it is difficult to see where the money is going to come from to deal with the latest round of price increases that are going to follow hot on the heels of the latest fuel price increases.
“Most consumers have cut out luxuries from their spending some time ago and will now have to start cutting on basic necessities just to stay alive,” Roets said.
He said it was highly likely that the fuel price would reach R20 a litre before the end of the year, prior to settling down around October or November.
Roets said it was also painfully evident from the rapid growth of Debt Rescue that a growing number of consumers were falling behind in debt repayments and resorting to the process of legal debt review.
“Aside from making life much more difficult for motorists, it is also going to have a wider impact on consumers as the vast majority of goods in South Africa are transported by road.”
“We are seeing daily records being set by the number of distressed consumers who are knocking on our door to be placed under debt review.
“We are going to adapt our lifestyle to adjust to tighter market conditions doing more with less.” Roets said.