HEFTY FUEL PRICE HIKE A BITTER BLOW TO CONSUMERS
SOUTH African households, reeling from the financial fall-out of the Covid-19 pandemic, will be under even further strain with the massive increase in fuel prices that come into effect today, experts warned.
Petrol will increase by a massive R1, diesel by 66 cents and illuminating paraffin by 35c, thanks to the standard monthly hikes, coupled with the increases in the general fuel levy (up by 15c a litre), Road Accident Fund levy (11c a litre) and carbon fuel levy (1c a litre) announced by Finance Minister Tito Mboweni in the Budget.
Debt Rescue’s Neil Roets said in a statement yesterday: “These increases, as well as the weakening rand, are definitely no joke, and those consumers who are already embattled with high costs of living will feel this in their pockets this month.”
Economist Dawie Roodt said: “The fuel price is adjusted according to three factors: the various taxes, our exchange rate and the price of oil. While oil will stabilise and won’t increase much further, the exchange rate is a concern. The rand will remain relatively stable for now, but will keep on weakening, and the effect of this will overshadow the low oil price. Petrol prices will thus continue to increase, as will our taxes. However, the double-whammy increases experienced this month will only be repeated again in a year’s time.”
Roets said the latest price hikes came into effect after the four-day Easter weekend, when consumers tend to spend more on things such as travel and entertainment.
Overspending and higher living costs would see a rise in the use of credit, as consumers return from their holidays and are faced with day-to-day realities, he said.
The latest research from the National Credit Regulator showed that the accounts of almost 50 percent of the country’s 27 million credit active consumers were in arrears.
“This is a concern, not least as those who are in arrears will also be charged a far higher interest rate when next they apply for credit, as they are found to pose a higher risk to the credit provider,” said Roets.
Last week, Sebastien Alexanderson, chief executive of National Debt Advisors, said: “Between March and December 2020, the analyses done by our National Debt Advisors’ research department showed that Covid 19, the lockdown and subsequent interruption of income negatively impacted the finances of 80 percent of South African households.
“With an already indebted nation – who are historically poor debt repayers – this has been like adding fuel to a fire,” said Alexanderson.
“Around 10 percent of our clients missed payments or made short payments on home loans and vehicles – with unsecured debt having the highest delinquency rates.”
Abigail Moyo, spokesperson for the United Association of South Africa, said the trade union was deeply concerned by the continuous fuel price increases leaving workers in financial distress, as they had to chip in more for their basic needs. The increase would be passed on to consumers, who would be forced to pay more for their basic needs.
“These levy hikes are not doing ordinary South Africans any good in terms of balancing their household budgets. Why go through with the levy increase when the SA Revenue Service announced an unexpected extra R38 billion in revenues collected for the year ending March 2021?” Moyo asked.
“The price hike for illuminating paraffin of 35c a litre will leave South Africans who have no access to electricity reeling, as they depend on paraffin for household use and heating purposes. With winter around the corner, they will feel the bite of more than the cold,” Moyo said.