Support will haunt consumers

The fact that the government has by artificial means supported the fuel price to keep it well below the 23c-25c a litre that had been expected will come back to haunt consumers in months to come says economist Dawie Roodt.

“There is a set formula that the energy department and economists use to calculate the fuel price on a monthly basis taking into account the ruling international price of crude oil and the value of the rand currency against the dollar,” said Roodt.

“By circumventing this methodology and limiting the price increase to 4.9c a litre and keeping the diesel price unchanged, there is the very real risk that the increases for months to come will be higher than would otherwise have been the case.”

Debt Rescue CEO Neil Roets says while the temporary reprieve is welcome, it would be unrealistic to look at this as a “gift from government”. He says SA’s economy is at one of its weakest points, pressured by a weakening currency and growing unemployment.

“Depending on how the currency performs over the next few months and given that there is strong pressure by oil producing countries for a hike in the price of crude, we could be looking at double-digit increases again in October and November,” he says.

Roets says the fallout from Donald Trump’s trade war with China and the European Union is already having an effect on SA’s economy.

“We see this on a daily basis with clients coming to us to be placed under debt review because they were no longer able to service their debt. Growing numbers of them have had to accept lower wages in order to avoid being laid off or were facing retrenchment down the road.

“The harsh reality” is that consumers have collectively notched up a debt burden of over R1.37-trillion.