A triple knock for consumers

Cape Town 120402- People travelling to khayelitsha sitting on a carriage with no windows. Metrorail tickets has gone up.Picture Cindy waxa.Reporter Janice/Argus

Cape Town 120402- People travelling to khayelitsha sitting on a carriage with no windows. Metrorail tickets has gone up.Picture Cindy waxa.Reporter Janice/Argus

Published Apr 3, 2012

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Consumers, especially the poor, are in for a tougher economic time and there does not appear to be any let up as increasing train fares, petrol costs and electricity are all going to make for a bleak winter ahead.

And detractors of the train fare increases said that, despite having to cough up more, commuters were still having to battle with overcrowding, late trains and an overall deteriorating rail network.

The Metrorail price hike from Sunday means single tickets increase by R1, return tickets by R2 and monthly tickets by up to R30. Weekly ticket increases range between R8 and R14.

The increase in commuter fares is of huge concern with the provincial Department of Transport and Public Works lobbying Metrorail to back down from increasing its fares from 27 percent to a single-digit number.

Cosatu and the Cape Chamber of Commerce and Industry negotiated a deal with Metrorail that reduced the the increase to between 13 and 21 percent. Transport and Public Works MEC Robin Carlisle has maintained that they have sold out the people of the Western Cape.

Carlisle was lobbying for a single-digit increase. “What’s more, these increases are on top of the 33 percent fare increase in 2010. Since then, Metrorail’s services have deteriorated significantly,” he said.

In defending the fare increases, Mosenngwa Mofi, Prasa Rail Operations chief executive officer, said the prices still favoured the poor.

“The actual increase remains in the range between 40c and R1. Prasa remains committed to ensuring that commuter and passenger rail remains the most economical transport mode in the country,” said Mofi.

Tomorrow, petrol will increase by a staggering 66c a litre on the coast (and 71c inland) bringing with it immediate and long-term negative effects. Motorists at the coast will now pay R11.59 a litre for 95 octane and R11.56 a litre for 93 octane.

In a few months, the City of Cape Town is proposing to hike water and sanitation by 15 percent and electricity by 11 percent.

Travelling costs will increase immediately, but the bigger impact, which will affect everyone, will be the escalation in price of all goods and services, economists have warned.

The massive increase in the price of petrol and diesel comes as a major blow to business and would inevitably lead to increases in the price of food and public transport, the Cape Chamber of Commerce and Industry said.

Economists are warning that we face a second big hike in the price of petrol next month. This month’s hike took into consideration an increase in taxes, which means that if there is a price hike next month, it won’t be as big as this month’s, but it could be close to 59c a litre.

Cadiz Asset Management senior economist Adenaan Hardien warned that consumers should brace themselves over the coming months.

“The increases translate into more economic pain for the consumer. There will be less money to spend unless it is offset by wage increases,” Hardien said.

Johan Rossouw of Vunani Securities said electricity and fuel were not expenses that could be avoided.

“Most consumers will be faced with additional costs, people will try and travel less, but they have to get to work. The increases will eat into the monthly budget, and there will be less money to spend elsewhere.”

Christo Luus, chief economist from EcoQuant, said people will feel the increase immediately through paying more for petrol than they did previously, but that the impact on food and other purchases will only be felt later when food prices start to increase.

He said he expected a 5 percent increase in retail spending in the second quarter of the year as opposed to the 7 percent increase experienced over the Christmas holiday.

The massive increase in the price of petrol and diesel comes as a major blow to business and it will inevitably lead to increases in the price of food and public transport, Gordon Metter, deputy president of the chamber, said.

The hikes across the board would be a harsh blow to the poor, Cosatu spokesman Patrick Craven said.

“As might be expected, the poorest households, the least organised, worst resourced and most marginalised, who tend to vote for the ANC, bear a disproportionate burden,” he said

According to the City of Cape Town’s draft budget, electricity purchased by the city is to increase by 11 percent in July.

“Cosatu has over and over again acknowledged and celebrated the tremendous strides made by the ANC government. But the current rates of unemployment, poverty and inequalities, and the unequal levels of service delivery, in particular as they affect women and youth, are a ticking time bomb,” said Craven.

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Cape Argus

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