Wednesday’s hefty 93c/litre petrol price hike is likely to hit consumers hard – and not just at the fuel pumps. The Minerals and Energy Department announced the biggest fuel price hike this year on Friday, prompting AA spokesman Gary Ronald to warn the hike would affect “absolutely everything”.
“Anything that needs to be transported by road will be affected,” he said.
Commuters were also likely to see an increase in taxi and other public transport fares.
“We also have the September school holidays coming up, and unless people have paid already, we are likely to see a drop in tourism,” Ronald said.
The petrol price increase comes amid fears of already rising food prices. FNB economist John Loos said last week that while July Producer Price Index data looked good, it pointed to “the early signs of accelerating food price inflation”.
Food prices were the biggest component of the consumer price index (CPI), but because the economy was currently weak, prices would probably not push inflation out of the desired 3 to 6 percent corridor.
“However, what a food price inflation surge does is affect the lower income groups more significantly, because food has a higher weighting in the CPI basket of the poor.”
A World Bank survey of global food prices in July showed a global increase of 10 percent, with maize and soybean prices hitting record highs because of drought and heat in the US and Eastern Europe. “From June to July, maize and wheat rose by 25 percent each, soybeans by 17 percent,” it said.
A report by economist Mike Schussler, released at the beginning of August, found that local maize prices for the first seven months of the year were 44.4 percent higher than for the same period last year.
Maize is a staple food in SA, and price hikes also affect the cost of meat as maize is used to feed livestock. In July, Cosatu expressed concern at the rising food prices, saying: “This is particularly worrying as maize is a staple diet for the majority of poor South Africans, millions of whom are already struggling to get food on the table.” Stats SA data indicates that SA’s poorest 30 percent spend nearly 40 percent of their monthly income on food.
Pick n Pay chairman Raymond Ackerman said that “for the poor, the smallest food price increases will be even more severe, and among the poorest 30 percent of our population, inflation for even the most basic food basket will be significantly higher”.