Latest fuel increase now makes a trifecta of tariff increases
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By Neil Roets
As if there were not enough headaches to contend with already – think the revised adjusted lockdown level 4, extraordinary icy conditions, intermittent load-shedding, rising CPI and renewed job losses in the hospitality, alcohol and restaurant industries – South Africans will need to brace themselves for more bad news.
This as utility and fuel prices across the board jump drastically in July. While municipal costs increase annually, they are significantly compounded by rising petrol, diesel and illuminating paraffin costs, as well as electricity both direct to consumers or via municipalities.
These latest cost increases follow months of increases across the board in the cost of food, clothing and transport, which have had a recurring negative impact on consumers’ financial standings and lives.
To put this in perspective, consumers, as of today, will pay:
- Between 13,48% and 14,59% for electricity, depending on whether they live in Cape Town, Johannesburg or Durban. This follows Eskom’s 15% tariff hike that happened in April.
- 4,3% more for refuse services, 2% more for property rates and 6,8% more for water and sanitation in Johannesburg. A water demand management levy of R28,32 will also be added per calendar month per residence that has its own meter.
- 4,5% average increase in rates, 5% increase for water and sanitation and 3,5% for refuse removal in Cape Town; and
- 4,9% for property rates, 4,9% for refuse and 8,5% for water and sanitation in Durban
To add insult to injury, motorists and commuters are bracing for a fuel increase on July 7th when petrol is expected to go up by 23 cents per litre, diesel by 38 cents and illuminating paraffin by 32 cents. This is thanks in part to the improved global economy which is boosting the demand for oil, and the rand softening against the dollar (R14,30).
Combined, this is an extraordinary set of increases for consumers to bear. We know that millions are buckling under financial pressure, thanks in large part to the increased impact of the coronavirus, specifically the surge in Gauteng on the back of the Delta variant, leading to a revised lockdown level. Many in the restaurant, hospitality and alcohol industries – as well as their extensive supply chains - have either been placed on short time, had their incomes cut or even lost their jobs as a result. While there is talk of a renewed form of TERS, it is, to say the least, carnage on the streets.
Last month, CPI hit a high of 5,2%, a sure signal that everyday costs are rising. The main contributors to the rise in the consumer price index are food and non-alcoholic beverages, housing and utilities, transport and miscellaneous goods. The impact on the cost of food has become so high – it recorded a 6,7% rise month-on-month, the highest increase since July 2017 – that 42% of 1633 South Africans surveyed in May by Debt Rescue have taken out store cards to buy groceries.
Consumers are going to have to take extraordinary measures to try and curb their everyday costs. Food, transport and power prices have spiked dramatically. This, on top of the annual increase in municipal rates means that even though we knew a rates increase was coming, households simply don’t have the leeway to cope with any further increases. Additionally, while working from home may mean a saving on your fuel and transport costs, any savings there will be off-set by the cost of having to heat your workspace yourself.
To help consumers cope, Roets says they, as a matter of urgency, need to work out their monthly budgets – based on the latest costs – and their household incomes. Where they can cut, they need to. This could be in the form of pausing any memberships, such as gyms which are closed for the time being anyway, finding new ways to make meals that can stretch further, safely sharing transport where possible, and being more frugal in general.
Fixing clothes vs. buying new ones, avoiding using any store cards to prevent incurring high interest costs, put the credit card down and only use cash; these are just some of the things consumers need to do to save a few rands here and there.
Should they fall into debt, which is a very real risk as millions turn to both scrupulous and unscrupulous sources of finance, consumers need to manage this debt extremely wisely: they are paying a high price to access extra cash, a price that can last months or years, even generations. When consumers find that they aren’t able to pay the minimum required monthly towards their debt, they should seek help from a professional in the form of a debt counsellor. Debt counselling is a legal process that assists consumers to repay their debt in a more affordable manner by reducing the instalments and extending the repayment terms. The consumer also obtains protection against new legal action.
As the temperatures plunge, and the vaccine roll-out slows to a crawl, consumers are being put under pressure from every direction. Economically they are being hit hard, their health is at risk as are their livelihoods.
It’s not good news out there, consumers need to vasbyt and do everything that they can to stay afloat – mentally, physically and financially.
Neil Roets is the Debt Rescue CEO