CAPE TOWN - The proposed fuel hike in December is expected to hit indebted consumers the hardest.
Consumers are in for another price hike with fuel expected to swell by up to 70 cents a litre in December. The plunging rand and soaring crude oil prices is said to push up the price of fuel, says independent economist, Dawie Roodt.
While consumers can expect to pay as much as 70 cents a litre more for fuel, Diesel is said to increase by 60 cents a litre. “The political and economic instability in South Africa is going to keep our currency volatile. I believe that further increases in the crude oil price are likely with a further decline in the value of our currency virtually inevitable”, Roodt said.
Added to the current economic uncertainty, CEO of Debt Rescue, Neil Roets says that this comes at a time when consumers can least afford it. "More than half of all South Africans are three months or more behind in their debt repayments, collectively owing some R1,71-trillion in debt (latest National Credit Regulator stats)".
"It is highly likely that the ratings agencies will announce downgrades to our sovereign debt to junk status before the end of the year which will further impact on the rand".
"Consumers should brace themselves for hard times ahead and face the fact that all of us are now going to be collectively punished for our government’s inability to grow the economy and create prosperity for all South Africa’s people".
Roets said the continuous increase in the diesel price is especially devastating. This is because virtually all consumer goods are transported by road and this will result in higher prices across the board.
"We have reached the point where consumers simply have to face the fact that they cannot maintain their lifestyles as they did in the past. It has now become a matter of survival".
"Opening more accounts and acquiring more store cards and credit cards is absolutely not the answer. The question to ask is no longer do I want this but do I absolutely need this", said Roets.
READ: Why are South Africans paying so much for petrol?
The spanning effects of a fuel hike is also catastrophic to the unemployed. One in four South Africans regularly suffer from hunger, according to non-governmental organisation, Oxfam.
"Year by year our unemployment figure goes up with the World Bank claiming that 27.7% of all South Africans who want to work are unemployed. Even worse is the fact that 39% of all unemployed South Africans have never worked before. Among young people this figure is even higher – at 60.3%. The numbers also highlight that many young people struggle to find their first job", Roets said.
In his professional domain, Roets notices the gravity of the situation.
Debt Rescue showed a year-on-year increase of almost 25% in clients who wanted to go under debt review because they could not repay their debts, says Roets.
"South African consumers have consistently notched up the unenviable reputation as having one of the highest debt ratios as a percentage of GDP among emerging market economies", concluded Roets.