While having been forced to deal with the energy crisis in South Africa, the month of August brings further economic woes for consumers in the country, this time in the form of steep fuel price hikes.
The Department of Mineral Resources and Energy (DMRE) announced earlier this week that petrol and diesel prices increased for August.
Both grades of petrol increased by 37 cents per litre, while diesel rose by between 71c (50ppm) and 72c (500ppm).
This means motorists now pay R22.11 for a litre of 95 unleaded petrol at the coast and R22.83 in the inland regions, and 93 unleaded will now retail for R22.43.
50ppm diesel will now carry a wholesale price of R19.82 at the coast and R20.53 inland.
Frank Blackmore, the lead economist at KPMG, told Business Report that while we did see a strengthening of the rand to the dollar by around 27c over the month, the movement in the international oil price increased the cost of petrol by around 64c, while for diesel the cost is now around a rand more.
“This required the petrol price to increase in order to make up for the under-recovery that resulted. This, along with the electricity prices that increased in July, will obviously put inflationary pressure on the economy. I don’t think it will increase inflation but what it will do is delay the decrease in inflation and therefore the decrease in interest rates over the next six to nine months,” Blackmore said.
Hayley Parry, a money coach and facilitator at 1Life’s Truth About Money, says that is not good news for cash-strapped South Africans.
“If you have got any holes left in your belt to tighten, now would be the time to do so. Perhaps this is the time you want to start thinking about carpooling. The reality is, though, that the price of petrol has gone up and you need to make sure you’ve made adjustments to your budget so that you can cover the difference,“ Parry advised.
“Budgeting is a verb, that means it is a doing word. It means that you need to be budgeting on a monthly basis. Why? Because the price of things changes. Consumers need to find additional space in their budget in order to make adjustments for this increase in the cost of fuel and transportation. You need to be strategic about where you are driving, and when, but most importantly, make sure that (when) you are looking at your budget you are seeing where you can cut in other areas in order to afford this increase in the price of fuel.”
Brina Biggs, a senior manager at 1Life Insurance, says that this will not help with motorists’ monthly commute, as well as potentially with the price of food down the line, which is still relatively high.
“Consumer price inflation is also called close to matching percentages last seen in October 2021. So yes, petrol is up, but inflation is holding, and food prices are softening. With sustainable electricity supply the knock-on effect will be no harder than what we have weathered recently,” Biggs said.
Andra Nel, a purpose manager at KFC’s Add Hope, says that this was another startling announcement for consumers.
“We have to consider the impact that this will have on consumers and the fact that this impacts so many other household expenses like food, where we know the inflation is already sitting at 14% ... people are already going without food on a daily basis. We have to bear in mind that in our country, almost three million children a day are going hungry and don’t know where their next meal will come from,” Nel said.
Meanwhile, Neil Roets, the CEO of Debt Rescue, believes that relentless financial pressure is pushing South Africans to the point of no return.
He says the latest trend he has noted is that motorists are downgrading their vehicles to more affordable and fuel-efficient cars.
“The latest petrol price hike is likely to entrench this trend even further, though there are many more repercussions for households across the country.
“Food inflation hit record highs in the first quarter of 2023, and embattled consumers are struggling to put enough food on the table. Now there will be even less to go around as they contend with higher transport costs, both private and public,” Roets said.