Create a budget and stick to it as petrol price soars, economists predict a rise in food prices as well

By Ashley Lechman

The cauldron of debt and economic worries has just had a new ingredient added for South African consumers as March welcomed a massive fuel price hike.

As load shedding continues to have a detrimental effect on the economy, South Africans entered 2023 in darkness thanks to the rolling power cuts, contended with an interest rate hike, corruption scandals at Eskom, and now, a fuel price increase, with economists predicting a further hike for next month if global supply costs remain high.

To further add to the stress of consumers, an 18.65% increase in electricity tariffs also looms in April.

On Monday, the Department of Mineral Resources and Energy (DMRE) announced that fuel prices would increase from Wednesday because of the cost of international products – based on the oil price – and a weaker rand versus the dollar.

The DMRE said fuel prices were rising due to lower inventory levels globally and closures of refineries in some countries for seasonal maintenance.

Unleaded 95 and 93 petrol will cost R1.27 a litre more and rise to R22.30 at the coast and R22.95 inland.

Diesel will go up by between 30c and 32c per litre while illuminating paraffin will increase by 13c a litre.

The maximum retail price for LP gas will be R5.22 a kilogram more due to the higher freight rate and propane and butane prices during the same period.

Brina Biggs, Senior Manager at 1Life, told Business Report that the petrol price increase is going to impact households negatively.

“The increase will not only see travel costs increase but groceries as well. Food inflation is already at a 6-year high of 9%, thanks to prolonged load shedding,” Biggs said.

Portia Mvubu, Head of Digital at Orange Ink, says that through social media, the petrol price increase forms a part of the broader social-economic impact that has built up in South Africa.

Mvumbu says: “A few weeks ago, we had Sona, which pre-empted what was coming from an economic stand point and then we went into our budget, which had a lot of reaction from consumers in terms of the economic impact it would have on them. And then we had the greylisting announcement.”

She further told Business Report that consumers are talking about the fuel price increase, as well as many other things, such as the cost of food, commuting, the cost of debt and their incomes.

Efficient Group’s chief economist Dawie Roodt said the fuel price increases were going to push people to the edge as the prices of consumer goods would also be impacted.

Roodt said that cash-strapped consumers could only take so much of the economic hardships brought about by the energy crisis, high inflation, elevated interest rates and unemployment.

“The real answer is that we need decisive and real political leadership to make serious and unpopular decisions. At the moment, we are very indecisive,” Roodt said.

According to the latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD), South Africans are already paying more each month for basic food items that they simply cannot do without.

Debt Rescue CEO Neil Roets yesterday said with each new price increase, the population was sinking deeper into a financial pit that was not of their own making.

“In light of this untenable scenario, which is exacerbated by the spiralling price of staple foods and drinks like potatoes, cooking oil, bread and eggs, each price hike is akin to rubbing salt in an open wound,” Roets said.

“Consumers are being squeezed from all sides. How much longer can they realistically be expected to hang on?”

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