Rising fuel, electricity prices will hit households

By Vogashen Pillay

The rise in fuel prices and increase in toll road tariffs that came into effect last week, along with the looming electricity price hike, will likely have a significant impact on most households.

So say economists and a civil society organisation. Petrol, diesel and paraffin prices shot up last week. Both grades of petrol increased by R1.46 per litre, while diesel went up by R1.44 for 500ppm and R1.48 for 50pm Illuminating paraffin increased by R1.21 per litre.

The SA National Roads Agency’s toll tariff increases for roads also came into effect last week. The toll fees for a single trip between Durban and Joburg is R286.5 for all light vehicles while for heavy vehicles the cost ranges from R520 to R1 050.

The National Energy Regulator of SA (Nersa) has also approved a 9.61% tariff increase for Eskom that will come into effect on April 1.

Mervyn Abrahams of the Pietermaritzburg Economic Justice and Dignity Group (PMBFJD) said: ”It is only a matter of time before we can expect an increase in the price of food. In February, the food basket price was R4 400 and that alone is well above the national minimum wage. The increase in food prices that we are talking about is for essential food items.”

Another concern was that an interest rate hike may be announced this month. “Massive increases such as this will cause a hike in the interest rate and affect the middle class the most. When the middle class is affected it has a major effect on the economy.”

Neil Roets, CEO of debt counselling firm Debt Rescue, said that the rising cost of living would have a devastating impact on consumers.

“The average household is already spending most of their disposable income on debt. And with these increases, we will find that there are many more South Africans who are overly indebted as they will have less income in their pockets.

“My advice to South Africans is not to spend beyond their means.”

Professor lrrshad Kaseeram, of the University of Zululand Economics Department, said the fuel price hike would filter through the entire economy. ”One of the major issues that we face is that with the rising cost of fuel, electricity, and even toll tariffs, we don’t see the same growth in salaries and wages. Now with negotiations with salary increases taking place it is unlikely that workers will get the required 6% and that may lead to protest action.”

Kaseeram said that even though Eskom was granted a 9.61% tariff increase it was still not enough.

“Eskom would still need government assistance. One of the problems is that there are a significant number of South Africans who are not paying for electricity which puts pressure on Eskom and in turn on the middle class South African as they have to foot the bill for the people who are not paying for electricity.”

Dr Sanele Gumede, University of KwaZulu-Natal lecturer in economics, said: “South Africans living in rural areas don’t have a lot of access to supermarkets and with the rise in prices they will now find themselves paying more for food. Also of concern, is that they will pay far more for taxi and bus fare prices and this will he very difficult for the poor as there hasn’t been a massive increase in the national minimum wage.”

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