Neil Roets, CEO of Debt Rescue says that expecting consumers to dig even deeper in their pockets is simply unconscionable. Picture: Dave Thompson/Bloomberg
While some reprieve will be felt by diesel users for the month of May, petrol users on the other hand will be left scrambling once again to adjust their monthly budget after the official fuel prices were announced.
Petrol prices have jumped from R22.64 a litre for 93 octane petrol and R22.97 for 95 octane petrol in April to R23.01 and R23.34 a litre, respectively.
According to the Automobile Association (AA), the surge in international oil prices is the main driver contributing to the under-recovery in petrol, while the average rand/US dollar exchange rate during April actually provided some relief, without which the increases may well have been higher.
The AA said the increases would exert further pressure on embattled consumers grappling with food inflation, which hit record highs in the first quarter of 2023.
Neil Roets, CEO of Debt Rescue, says that expecting consumers to dig even deeper in their pockets is simply unconscionable.
“Embattled consumers are already struggling to put enough food on the table, let alone balance their monthly budgets, and another steep petrol price increase on the back of the 18.65% increase in electricity tariffs will sound the financial death knell for the majority of the country’s workforce,” he warns.
While food prices in March this year were 14% higher than they were at the same time last year, most South Africans can expect their salaries to go up by less than half of that over the next 12 months, according to management platform Remchannel’s latest pay survey.
“Invariably, South African households are under pressure with the vast majority of employees becoming poorer,” Remchannel’s MD René Richter said in a statement. “If households want to climb out of this rut and gain more wealth, their income must increase at least by more than the consumer price inflation (CPI) rate.”
Roets says he is deeply concerned that, in addition to spiralling living costs, the country’s workforce, who rely on both private and public transport to get to work and back, will have to spend an even more disproportionate share of their salaries to accommodate the corresponding hikes in taxi, bus and train fares – and of filling up their own vehicles.
“The reality of this is that many more people across the income spectrum will turn to credit to get through the month,” says Roets.
He notes that they are seeing more and more people default on their debt.
“My advice to those who are in a debt trap is to remember that you are not alone. Seek help from a registered debt counsellor who can assist you to manage your financial predicament,” he advises. “This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets further said.
Abigail Moyo, spokesperson of the trade union UASA said that the petrol price increase will make it more expensive for workers to get to work and back with petrol-pumped vehicles, while creating a knock-on effect on the price of food and other essential items.
“The price drop in diesel and illuminating paraffin will put a spring in the step of consumers who utilise these fuels for personal and business use as we approach the cold season, when keeping warm can mean survival. UASA encourages workers to keep their budgets in check and be money-wise,” Moyo said.
Frank Blackmore, lead economist at KPMG South Africa, said: “On the positive side, the diesel prices are set to decrease by either 47c or 73c of your April prices for diesel with 50 parts per million Sulphur and 500 parts per million respectively. This will mean for 50 parts per million diesel you should now pay R20.50 – this represents about a 2.2% reduction over April prices.
“The decrease in diesel prices means that because a lot of our industry relies on diesel for transport, there would be less pressure on the production side of the economy and production prices, whereas the increase in petrol prices for consumers would basically mean an increase in consumer price pressure that we would see coming through in the CPI after a few months into the future,” he said.
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