By Ashley Lechman
economists and analysts fear the worse for the South African economy as the cost of living crises spirals out of control for consumers in the country.
This comes after the South African Reserve Bank (SARB) Monetary Policy Committee (MPC) raised the repurchase rate by a shocking 50 basis points, which came into effect in April.
Motorists eagerly awaited some reprieve following the announcement to come in the form of fuel price cuts. However, barring cuts on the diesel prices, petrol saw a minuscule decrease of 1c per litre, while the 95 octane grade inland saw a price increase.
Official figures showed last week that the retail price of 95 octane petrol would increase by 2c per litre while 93 octane petrol would drop by 1c.
Debt Rescue CEO Neil Roets said: “The…marginal drop in the price of 93 octane petrol is cold comfort for millions of South Africans who face a volley of price increases in April, not least of which the much-protested Eskom price hike of 18.65%, and a shocking repo rate hike of 50 basis points that has seen interest rates climbing to unprecedented levels,”
“While price adjustments are largely determined by the oil price, as well as the status of the rand versus the US dollars – as oil is priced in dollars,” he said.
He said the repercussions of global decisions like the announcement by Opec+ to cut oil production by about 1.16 million barrels per day is resulting in cost-of-living increases that are decimating people’s lives.
“For millions of South Africans buckling under the onslaught of monumental cost-of-living increases in April, there is no silver lining.”
“The repo rate hike will increase borrowing costs for consumers and reduce their disposable income even further while pushing levels of debt even higher,” he says.
The latest Household Affordability Index released by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD), showed that food prices in South Africa remain stubbornly high, with warnings that the pressure will linger for longer.
The PMBEJD basket comprises 44 core food items most frequently purchased by lower-income households, who make up most households in the country.
Thirty-eight items in the basket all saw a price jump in March 2023, 24 of which were 10% or more. These are all staple foods that families need on a daily basis to combat malnutrition.
KFC Add Hope purpose manager Andra Nel said consumers would need to pay close attention to the prices of food and their finances.
“While there was a slight drop in prices on fuel consumption, which would be welcome by consumers, the reality is there is a little bit more in the pocket, but it does not match what we are seeing from food price inflation perspective. A rate of food inflation of 9.9% year-on-year is still a very hard element for consumers to manage.
The household affordability index shows consumers are paying almost R5000 for a basic food basket.
“It is important to be aware that this will affect the poorest of the poor, who already struggling to make ends meet,” Nel said.
