The petrol price drop is most welcome, but not enough to ease the financial burden consumers carry into 2024, according to Debt Rescue and trade union Uasa.
Minister of Mineral Resources and Energy Gwede Mantashe this week announced a drop in the price of both petrol and diesel to start the new year.
The price of 95 unleaded petrol will fall by 76 cents per litre and 93 unleaded will decline by 62 cents per litre as of Wednesday, 3 January 2024.
Motorists will be paying R22.17 per litre for 93 Unleaded petrol, down from R22.79 in December, and R22.49 for 95 Unleaded, a drop from R23.25. The price of diesel will drop by between R1.18 and R1.26 per litre.
Abigail Moyo, the spokesperson of the Uasa, said,“ Uasa welcomes the relief that comes with the first fuel price announcement of the new year.”
While it was pleasing to see a fuel price decrease pattern favouring consumers, last year's knock-on effect of fuel prices still pinches consumers, with petrol prices higher than in January 2023.
Moyo said, “We hope the decrease will help parents juggle between resuming work and their children's back-to-school needs.
“Uasa urges the government to put consumers' needs first in 2024 and create a sustainable and transparent structure for fuel price reviews,” she said.
Neil Roets, the CEO of Debt Rescue, said, “Consumers should not get their hopes up, as the current geopolitical developments impacting international oil prices, such as concern around shipping routes in the Red Sea, cast a shadow over the sustainability of this downward shift.
“While the cost of diesel for transporters will no doubt alleviate the financial pressure on these companies, it remains to be seen whether this will impact the price of goods, and provide any financial relief for consumers,” he said.
Although any financial relief was welcome, consumers carry the financial burden of 2023 into the new year, intensifying the annual ‘Januworry’ trend of entering the year with more debt.
Roets said, “Interest rates remain at the highest level since April 2009 and the impact on South Africans is showing. We are deeply concerned that the financial pressure cooker of 2023, driven by the high cost of living, soaring inflation, interest rates, and ever-escalating electricity, food and fuel prices, has left the nation teetering on the brink of despair.
“When 66% of people surveyed by Debt Rescue say they have started to skip meals because they can no longer afford three meals per day, it is time for authorities to sit up and take notice,” he warns.
According to the 2023 NIQ Consumer Outlook Report for South Africa, consumers are feeling the squeeze amid a challenging economic landscape, with a majority experiencing the adverse effects of the current financial climate. A whopping 70% of those surveyed already feel as though they are living in a recession, while 76% said the increased cost of living was to blame for their financial struggles.
Roets says that the decline in personal disposable income was another red light that shouldn’t be ignored.
“The latest stats show that disposable income declined by 2.9% in the third quarter of 2023, while inflation continued to outpace wage and salary increases. This is especially concerning given that the cost of servicing debt increased at the same time, consuming 8.9% of disposable income, up from 8.8% in Q2,” he added.
According to TransUnion’s Consumer Pulse Study for the third quarter, debt management remains a concern, with more than one in three South Africans (38%) unable to meet their current bills and loan obligations.
“It is deeply concerning that a massive 69% of consumers in South Africa say they cannot pay their bills on time every month. We foresee that South Africans will have taken on more debt over the festive season, and will therefore lean even more heavily on their credit and store cards to get through January,” said Roets.