Fuel hike will impact all of us
THE FUEL hike this month will have a huge impact on everyone according to the chief executive of National Debt Advisors (NDA), Sebastien Alexanderson.
The hike sees motorists paying R1.21 more per litre of petrol, and R1.48 more per litre of diesel.
Alexanderson said most South Africans were already struggling to make ends meet, and the steep petrol price hike would see consumers having to again dip into their already limited disposable income to keep their heads above water.
“It is very likely that we will see petrol cost around R20/litre before year end, and this will have a huge impact on all of us.”
He said significant price increases such as these pushed up the price of all other commodities, as the cost to produce and transport raw materials rose.
“This is then reflected in the cost of everyday necessities like bread, milk, maize – and virtually anything and everything on store shelves. From seed to plate, we will see rising costs,” he said.
He said R1.45 for illuminating paraffin would also hit hard for those who used it for lighting, heating and cooking.
Alexanderson added the most financially vulnerable often lived far away from city centres and work hubs, making transport costs a huge part of their budgeted expenses.
“A petrol price increase will most likely lead to an increase in the price of public transport costs – something which struggling consumers can ill afford right now,” he said.
According to Alexanderson, South Africa is currently experiencing its highest unemployment rate, with millions of people dependent on social grants, while those who do have an income and who are credit-active have been significantly affected by the pandemic and subsequent lockdowns, and are still trying to recover.
“At the end of Q2 of 2021 – the average arrears debt per consumer was nearly R16 000. The current debt overall stood at R2077trillion – with over R1trillion of that allocated to unsecured debt,” he said.
He added if consumers were in arrears with their accounts and had borrowed to the point where they were using bank-issued credit cards and personal loans with interest rates of up to 25% to pay for food and electricity, they were likely unable to qualify for more debt.
“Especially since the National Credit Act (NCA) prohibits credible lenders from lending money to consumers who cannot afford it,” he said.
This, he said, would lead to consumers turning to rogue micro lenders and community mashonisas (informal loan sharks), where they will pay up to 100% interest on loans made.
“Inevitably, banks are going to start hiking interest rates, and this is never good for consumers.”