Sunday Times

SANTA ON RACK

Price hikes her­ald restive sea­son

- By SIPOKAZI FOKAZI and AN­GELIQUE ARDE Consumer Goods · Money Tips · Banking · Lifehacks · Cape Town · University of South Africa · Ghana

● South Africans are brac­ing them­selves for an un-merry Christ­mas — and a nasty dose of Janu­worry — as un­re­lent­ing price rises leave them with bro­ken bud­gets and empty pock­ets.

On top of record fuel prices, they can look for­ward to in­fla­tion-bust­ing in­creases next year in school fees and med­i­cal aid bills — leav­ing many fam­i­lies putting their monthly com­mit­ments un­der the mi­cro­scope to find sav­ings.

Richard and Ruth Lundie from Cape Town, who work in the non­profit sec­tor and have three chil­dren un­der the age of 10, said they planned to cut back on do­mes­tic help and life cover.

The Mead­owridge cou­ple said their home loan was their only debt. “But even with all our sav­ing mea­sures, we’ve found that over the past few months it’s harder to make cash stretch.”

This Christ­mas they will be economis­ing on presents. “We will be cut­ting back on our spend­ing to save for school uni­forms and kids’ sta­tionery in Jan­uary,” said Ruth.

The Lundies have swopped banks to save on charges and rarely spend money on fast food or meals at res­tau­rants.

“We don’t have TV, so we aren’t pay­ing for a li­cence or DStv sub­scrip­tion. Can­celling our land­line and opt­ing for fi­bre has also saved us money. Choos­ing cheaper cell­phone pack­ages has, too,” said Ruth.

“We’re also very se­lec­tive about where we shop, look­ing for spe­cials. We sel­dom buy red meat and have a chicken dish once a week. We’ve sub­sti­tuted mince with lentils.”

The Lundies and mil­lions of fam­i­lies like them will be un­able to avoid med­i­cal aid in­creases av­er­ag­ing 9%, on top of school fee hikes of about 10% — and no one can avoid the knock-on ef­fects of record fuel prices, which will raise trans­port costs and food prices.

The South­ern African Bus Op­er­a­tors As­so­ci­a­tion de­scribed this week’s R1/l fuel in­crease as “dev­as­tat­ing”.

Spokesper­son Sarah Set­laelo said it put the in­dus­try in a dif­fi­cult sit­u­a­tion as most bus com­pa­nies had al­ready in­creased their fares this year and would have “ma­jor dif­fi­culty do­ing so again … es­pe­cially in light of the very tough fi­nan­cial sit­u­a­tion that many con­sumers find them­selves in and the poor per­for­mance of the South African econ­omy”.

Petrol price in­creases so far this year have added R2.36 to the cost of a litre, on top of 2017’s R1.90. Unisa econ­o­mist Ja­col­ize Meir­ing said petrol now costs 22.6% more than it did a year ago.

Meir­ing warned con­sumers to plan a fru­gal Christ­mas and not fall into a “eu­pho­ria trap” over the hol­i­days. “Con­sumers tend to live be­yond their means and this causes them to take up more debt if they do not have any sav­ings,” she said.

If they were lucky enough to re­ceive a bonus, they should re­pay any out­stand­ing debt, pay ac­counts such as school fees in ad­vance, put some away for a rainy day … and only then spend.

Cape Town mother-of-three Pa­tricie Karengera, who works part-time as a care­giver, knows how hard it is to save.

“We try but it’s very hard now be­cause even bread is ex­pen­sive. With three chil­dren at school, we have a lot of ex­penses,” she said. “It’s bet­ter to shop only once a week and we save money by hav­ing a meal plan. We al­ways look at what is on spe­cial and eat meat only twice a week.”

Po­lit­i­cal econ­omy an­a­lyst Zamikhaya Maseti said con­sumers should tackle un­nec­es­sary spend­ing by dif­fer­en­ti­at­ing be­tween needs and wants.

“One can cut back by down­grad­ing from DStv’s pre­mium pack­age or from an ex­pen­sive cell­phone con­tract, and throw the money saved into a sav­ings ac­count that could be used for kids’ school­ing, for in­stance,” he said.

“Peo­ple should also em­brace tech­nol­ogy and shop on­line rather than go­ing to the phys­i­cal store, as it’s cheaper.”

WesBank spokesper­son Ghana Msibi said the eas­i­est way to cush­ion the fuel price in­crease was to drive less. “Con­sumers should eval­u­ate the need for long-dis­tance travel this hol­i­day sea­son. If the cost of far-off des­ti­na­tions isn’t ab­so­lutely nec­es­sary, then a hol­i­day at home could be a con­sid­er­a­tion.”

We shop once a week, al­ways look at what is on spe­cial, have a meal plan and eat meat only twice a week

Pa­tricie Karengera Mother of three school-go­ing chil­dren

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