Nation braces for price hikes

CONSUMERS must brace themselves for electricity, rates and transport price hikes that are in some instances more than double the country’s 4.6 percent annual inflation rate.

Mayor Patricia De Lille announced last month that with effect from July 1, municipal rates on property would increase by 10.83 percent and electricity would go up by 10.82 percent.

Metrorail also announced an increase in train fares countrywide for July 1. In the Western Cape, single tickets would go up by between 50 cents and R1 while weeklies would go up by R2. Monthlies are to cost between R2 and R38 depending on travel zone and class.

The price hikes will hit the lower income earners the hardest, according to Stanlib chief economist Kevin Lings.

“The average South African’s salary is two percent above inflation, which is less than the price hikes of essential services like water, electricity, rates and sanitation,” he said.

This directly affected consumers’ disposable incomes for food and clothing. Lings said this would likely get worse later in the year.

“In this tough environment people should not quit their jobs to cash in on their pension, or make more debt,” warned Lings. He said besides being hit by electricity and rates prices, lower income earners also spent the bulk of their money on public transport.

National Consumer Commission (NCC) spokesperson Trevor Hattingh said the rises in prices were not good for the country’s consumers unless accompanied by increments in personal income.

“A general increase prices normally leads of to increased inflation and interest rates. This affects a consumer’s affording ofgoods, and raises the repayment of any credit that a consumer may have,” said Hattingh .

The current benchmark interest rate is 5.75 percent but economists predict there will be a further upward movement in the rate next month.

However, Hattingh said so far the NCC had not received any complaints related to general price increases.

“The commission normally intervenes in a market where there is sufficient evidence of consumer complaints, and is empowered in terms of Section 48 (1) of the Consumer Protection Act to deal with issues of excessive pricing. The commission, however, does not regulate general pricing,” said Hattingh.

According to DebtBusters marketing manager Kelli Knutsen there were 10.6 million South African consumers in debt.

“This means half of all credit-active consumers are burdened with debt and have little to no room in their budgets for extra expenses or an emergency savings fund. Consumers are going to find their wallets stretched,” she said.