JOHANNESBURG - Rising fuel prices in South Africa are eroding the competitiveness of local companies by adding to the cost of doing business in an already depressed economy, the Inkatha Freedom Party said on Wednesday.
The price for 95 octane petrol increased by 18 cents per litre on Wednesday while that for diesel rose by 25 cents.
"The IFP is worried that rising fuel costs will have a negative impact on SMEs (small and medium enterprises) since most micro enterprises are dependent on hired transport to fetch items from wholesalers and manufacturers," the party said.
"They must make a series of decisions to sustain their business models as fuel costs impact their supply and overhead expenses. This reduces the competitiveness of the smaller businesses."
It said rising business costs would likely lead to further retrenchments in a country already grappling with an official unemployment rate of 29 percent.
"This is a worrying factor considering that the economy has already experienced a number of workforce retrenchments in various sectors over the past months, adding to the already high levels of unemployment," the IFP said.
The party, which has a strong presence in KwaZulu-Natal, said the increase in fuel prices would automatically reduce the purchasing power of residents in the province.
Commercial farmers reliant on diesel for production of non-rain-fed crops could be forced to scale down their farming activities, putting pressure on food prices, it added.
It urged the government to find ways of cushioning citizens against the effects of higher petrol costs and to speed up efforts to grow the economy.