In addition to spiralling living costs, the country’s greylisting by the Financial Action Task Force (FTAT), and the inevitability of Stage 8 load shedding, motorists will now have to fork out even more of their hard-earned money to accommodate another steep petrol price hike.
With half of the population now living below the poverty line and unemployment figures among the highest in the world, the latest fuel price hike poses a perilous sink or swim moment for millions of ordinary people countrywide.
On March 1, the price of 95 Unleaded and 93 Octane petrol rose by R1.27 per litre – pushing the price of petrol over the R22 mark, while diesel increased by 30 cents a litre.
The main driver behind the price increase is the cost of international products – based on the oil price – and a weaker rand versus the dollar.
“Every month the authorities issue stern statements to the people, advising us all to buckle up and brace ourselves for yet another hefty food price increase, an even steeper interest rate hike, and a more intensified stage of load shedding – and every month the population sinks deeper into a financial pit that is not of their own making,” said Neil Roets, CEO of Debt Rescue.
Roets says the reality is that South Africa is facing its own polycrisis that mirrors the global scenario.
“The markets are not convinced by the government’s plans to tackle the ongoing power crisis, nor are they optimistic that the stringent requirements set by FTAT will be met – especially in light of the latest Eskom bombshell, dropped by outgoing CEO Andre De Ruyter,” he warned.
The burning question is, how will the country’s greylisting status impact ordinary South Africans?
The fact is that the rand, the stock market, and the bond market all lost value quickly after the announcement was issued.
The rand, for example, went from an exchange rate of R18.20 to R18.40 to the dollar in a very short space of time.
This may not seem like much, but that puts the rand within shooting distance of its worst-ever value of R19.03.
“A depreciation of the rand leads to higher interest rates, and this will hit the consumer where it hurts most right now – in his pocket,” Roets explained.
To further put things into context, the latest fuel price increase comes in the wake of a February hike, on the back of a series of steep rate hikes announced by the Governor of the Reserve Bank, Lesetja Kganyago.
Then there is the massive 18.65% increase in electricity tariffs looming in April, that is still very much on the cards.
The latest Household Affordability Index by the Pietermaritzburg Economic Justice & Dignity group (PMBEJD) shows that South Africans are paying more each month for basic food items that they simply cannot do without.
“In light of this untenable scenario, which is exacerbated by the spiralling price of staple foods and drinks like potatoes, cooking oil, bread and eggs, each price hike is akin to rubbing salt in an open wound,” said Roets.
“Consumers are being squeezed from all sides. How much longer can they realistically be expected to hang on?”
Roets said they were seeing more people default on their debt.
“My advice to those who fall into this trap is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” he said.
BUSINESS REPORT