Double whammy for Christmas with massive fuel price hike and highest unemployment rate
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Durban - Considering the average car’s tank is about 50 litres, it will now cost motorists R1 000 to fill up, a sharp increase from the approximately R750 it cost to do the same in January of this year, when the petrol price was R14.99 a litre.
The price of petrol, diesel and paraffin has jumped sharply, again, and motorists are now paying over a third more for fuel since the start of this year.
“It’s completely unsustainable. The cost of fuel is going through the roof, making it even harder for consumers to make ends meet. R1 000 a month on fuel alone is a lot for an individual, or even family to cover, and if taking public transport, these increases will be felt deep in commuters’ pockets,” says Neil Roets, chief executive of Debt Rescue.
The latest fuel price hike follows November’s shocking increase of R1.21 a litre more for petrol and 148.2 cents more for a litre of diesel, while illuminating paraffin rose by an eye watering R1.45 a litre.
Now, motorists will need to fork out an extra 81 cents for petrol 93 and 95, an extra 73 cents for 0.05% diesel, and 75 cents more for 0.005% diesel. Illuminating paraffin will cost 42 cents more a litre.
“We are taking as much pain as we can. Each month is worse than the previous one and this comes at a time of other increased costs, such as the recent interest rate hike of 25 basis points, which makes all forms of credit that much more expensive – just as the festive season gets into gear.
“It’s no wonder then that so many South Africans put purchases on credit at this time of year, while 73% of consumers have no money left come January,” says Roets, referring to Debt Rescue’s latest quarterly survey insights.
The latest fuel increases also come at a time when our unemployment rate has tipped the scales again, peaking for the first time since the start of the Quarterly Labour Force Survey at 34,9% for the third quarter.
According to economist Dawie Roodt, these new increases will add to inflationary pressure.
“Notwithstanding the costs to the average commuter, we know that a lot of goods need to be transported long distances, which will reflect in higher prices at the till points. These inflationary pressures could force the SARB to increase interest rates even further. This is coming at an unfortunate time for South Africa,” he says.
Compounding matters for South African commuters is a weak domestic currency, which adds to the pain created by a global rise in fuel costs on the back of geopolitical and supply issues. Some of this will be absorbed by the Department of Energy’s slate levy, imposed earlier this year, but at R16,20 to the US dollar, the impact will still be profound.
“There is a bit of a silver lining in that it is not only the international oil price that has been high, but other commodity prices as well, which is good for South Africa because we are a major commodity exporter. But when it comes to petrol, we are on the receiving end of the stick.
“I have a suspicion that as soon as the commodity prices start coming under pressure, sometime next year, the rand may weaken even further. So even though the oil price may come down over the next couple of months, my suspicion is the weaker currency will neutralise most of that effect. I also expect the finance minister to add a few cents or even more to the petrol price in February,” says Roodt.
Roets advises motorists to make a plan and find alternative ways to travel so that they can save on their fuel costs, as well as other associated costs such as insurance, parking, day-to-day wear and tear, and servicing. A few tips are:
- Carpool: While many still work from home, which is a blessing for the time being, for those who are going to work, it is wise to find a colleague to share the cost of fuel. This will cut the cost in half.
- Whenever possible, hold online meetings via the platform of your choice. It’s a greener, cheaper option, saving commuting time and fuel.
- Use one car: If there is more than one car in a family, either consider selling the second or use one only for longer journeys to cut down on the wear and tear and ongoing maintenance of the vehicle.
- Use public transport: If there is a bus or taxi route near you, consider taking these alternative transport modes instead of using a car.
- Share the school run: Find others in your children’s school who live in your neighbourhood and take turns to drop and collect the kids.
“As the New Year comes around, consumers are strongly advised to reconsider how they travel. There are ways to cut back on fuel, and it does take a change in behaviour. But paying over a third more for petrol than we did in January is extraordinary and will be felt across the supply chain of groceries and products.
He says given that almost three quarters of consumers traditionally have no money come January, the average South African household will really battle to make ends meet in the wake of this latest fuel hike.
Roets adds that credit is often the only option, but this is expensive, causing a nasty catch-22.
“Should they find themselves in a credit trap, debt counselling is a viable and legal way to pay back their creditors. A note however is that no other credit can be taken out during this process, so consumers have to find other ways to cut back, and finding alternatives to save on fuel is among them,” concludes Roets.