April’s fool is no joke

154 Meulspruit Dam has dried up completely and leaving thousands of fishes dead, farmers are battling to feed their cattle and some cattle has died due to the drought in Ficksburg, Free State is one of the provinces which it is declared disaster area. Picture: Itumeleng English 12,11,2015

154 Meulspruit Dam has dried up completely and leaving thousands of fishes dead, farmers are battling to feed their cattle and some cattle has died due to the drought in Ficksburg, Free State is one of the provinces which it is declared disaster area. Picture: Itumeleng English 12,11,2015

Published Apr 1, 2016

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Johannesburg - Despite today typically being one on which people play practical jokes on each other and behave foolishly, South Africans are not laughing.

This is according to DebtBusters, which notes there are many factors weighing on South Africans' pockets.

The company says today the “economy will be playing the biggest joke of all and South Africans will not be laughing this time round”.

Among the strains South Africans are facing is the increase in the petrol levy, which comes into effect today, as does Eskom’s 9.4 percent tariff hike.

DebtBusters says these increases will affect South Africans already struggling financially.

“We can expect to see a knock-on effect in the price of food, transport and rental as stores, transport operators and landlords try to pass along the cost of their increased expenses onto consumers”.

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In addition to these hikes, March also saw a 0.25 percent increase increase in the repo rate, taking the prime lending rate to 10.5 percent.

“A repo rate hike always results in an increased cost of borrowing for consumers, as banks immediately increase the cost of home loans, vehicle finance, student loans, personal loans, store cards, credit cards and any other type of credit or loan that is linked to the repo rate.”

Moreover, notes DebtBusters, consumer price index figures reveal that. so far this year, South Africans have had to absorb on average a 6.2 percent year-on-year increase in electricity, food and transport. The latest Pietermaritzburg Agency for Social Development (Pacsa) report reveals that since January, the price of a 25kg bag of staple food for poor families - maize meal - has increased by 12 percent.

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The company says South Africans earning less than R5 000 a month will be seeing their financial situations severely affected as they try to manage the increase in the costs of living.

DebtBusters latest statistics show that low income earners have 80 percent or more of their debt as unsecured, expensive debt. “Our latest stats show that these consumers required 146 percent of their net income to pay their monthly debt repayments (before debt counselling).”

Wendy Monkley, head of Marketing at DebtBusters, is of the opinion that the financial situations of many South Africans is sure to deteriorate significantly with April fool's day increases.

“On its own, a 10 percent increase in electricity may not seem like much, but when added to the other increasing costs such as food and debt repayments, South African need to really brace themselves for very testing times financially. These increases or any extra expense for that matter, no matter how small can easily be the tipping point for them.”

“Consumers are going to have to rethink their finances and make any necessary omissions from their monthly expenditure if possible”, says Monkley.

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