SA reels under fuel price hike

The latest petrol price increase erodes what little is left of SA’s disposable income and the cost-of-living crisis reached a new high with the price jumping by 75 cents per litre yesterday.

Consumers now pay R22.92/l for 93 unleaded petrol, up from R22.17/l in January, and R23.24/l for 95 unleaded, up from R22.49/l.

The petrol price is now inching back to R25/l, taking us back to October 2023 when prices peaked at R25.86/l, a high not seen since July 2022 when they reached an all-time peak of R26.74/l.

The Automobile Association said the movement in international oil prices contributes a significant percentage to the increase, while the weaker average rand to dollar exchange is adding an impactful, but smaller margin.

Debt Rescue CEO Neil Roets said the petrol price hike will cut deeply into the little disposable income people still have left, making it almost impossible for the majority of South Africans to make it through the month. “Yet, somehow, they are expected to make do. This is deeply concerning.”

According to the 2023 NIQ Consumer Outlook Report for SA, consumers lived in a financial pressure cooker last year, with 70% of people surveyed feeling they’re living in a recession, while 76% said the high cost of living was to blame for their financial struggles.

Christie Viljoen, economist and senior manager at PwC, said SA is a consumer-driven economy, with more than 60% of GDP attributed to private final consumption.

“Therefore, when household finances are under pressure, economic growth is under pressure.”

Roets said the decline in personal disposable income is a sign of an emergency that should not be ignored, as a spike in household debt usually accompanies it.

“Consumers need lower inflation and lower interest rates. Lower inflation is important because most household spending is from disposable income.”

The results of the Altron FinTech Household Resilience Index released last month show that households remain under severe financial pressure, mainly due SA Reserve Bank’s restrictive monetary policy stance.