Consumers to feel the pinch

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Petrol pump nozzle

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File photo: Chris Collingridge.

Durban - eThwekwini residents must prepare for tough times ahead as a number of tariff increases, including electricity and water, officially came into effect on Tuesday.

Electricity has gone up by 7.4 percent, water by 9.9 percent for domestic consumers and 12.9 percent for businesses, rates by 6.9 percent and sewage and refuse removal will cost an additional 7.9 percent.

To add to the burden, the fuel price also went up by 29 cents a litre at midnight last night and taxi fares were expected to increase on Wednesday.

Speaking about the increases, chief executive of the Durban Chamber of Commerce and Industry, Andrew Layman, said this was not a good time for consumers

He said, unfortunately, people had become accustomed to annual increases of this size, which he said were higher than the Consumer Price Index.

“As far as fuel is concerned, the price increase is attributable to the poor exchange rate. This is one of the critical reasons why the country must address the issues which have resulted in low confidence levels as far as the rand is concerned.”

Layman also noted that the trade deficit was growing.

“This will not be arrested until we are able to maximise production and increase exports,” he said.

Layman said the cost of maintaining services, and the infrastructure that made them possible, was ever-increasing.

“We have been blessed in the past regarding tariffs for both water and electricity, which for some time were not accurately related to the cost of sustainability,” Layman said.

He said these were more expensive in many other countries, and that as far as water was concerned, South Africans had to learn and understand the fragile nature of its availability in the future.

“Across the country nearly 40 percent is wasted, in the sense that it’s not being paid for. If this were not the case, the tariff increases would not need to be so high,” he said.

Layman said consumers were going to have less to spend.

“This is a result of the increases having outpaced, perhaps, their salary increases. Their difficulties are exacerbated, I think, by increases in food prices, which in many cases exceed the hikes for water, electricity and rates.”

Spokesman for the KZN Taxi Alliance, Bafana Mhlongo, said taxi fares were going to go up by 10 to 30 percent, depending on the area.

He said an increase in fuel price always hit them hard.

“If the fuel increases, it means that the prices of all our spares goes up, which makes it very difficult to maintain our vehicles and therefore we have to increase the fares,” he said.

Mhlongo said they had asked the government to give them a subsidy so that passengers wouldn’t have to suffer.

“The truth is that it is passengers who suffer the most whenever there is a fuel increase,” he said.

Debtbusters chief executive, Ian Wason, said the increase in inflation was going to put further pressure on consumers.

He said there were now more than 13 million consumers, out of 21 million credit active consumers, who were in arrears.

“On top of this, most of the 8 million consumers who are up to date with their debt are struggling to make ends meet,” he said.

Wason said Debtbusters had seen a 20 percent increase in clients applying since April.

“This is in line with the comments from the retail sector that retail sales after Easter have fallen off a cliff. We are in the middle of consumer crisis, and there are no signs of the trends turning positive in the short-to-medium term,” he said.

He said consumers had been using expensive short-term debt to bridge the gap between their incomes and expenses.

“If their expenses continue to increase, consumers will try to borrow more, or they will default on their debt repayments,” he said.

The Mercury


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