The latest petrol price increases will not only hit businesspeople hard, but those costs have to be borne by already-burdened consumers.
Yesterday, the Department of Energy announced that the petrol price would increase by R1.00 a litre, bringing the price to R17.08 inland. Diesel has gone up by R1.24 a litre.
The department blamed the record-high increase on the rand depreciating against the dollar.
Taxi owner Motlatsi Rathokoane said the latest increase would place even more strain on business owners like him who were already struggling to cover their costs.
Rathokoane said there was no choice but to pass on the increased costs to customers. He said it was possible that they would now have to increase taxi fares by double the usual hike.
Rathokoane owns three taxis that ferry passengers from Noord Taxi Rank in Joburg to the Free State and Lesotho. At present it costs about R1200 to drive to Lesotho in a 26-seater taxi, and about R1100 for a Quantum.
“Usually we increase prices in December, but the taxi association had discussions to increase the prices during the year. We then decided otherwise. In December, we just think we will increase the price by about R20. We usually increase it by R10, but now we have no choice,” Rathokoane said.
Although they are only increasing prices at the end of the year, Rathokoane said taxi owners could already see the effect of the rising costs of living on their businesses.
“People are looking at alternatives, they are not taking taxis any more. Instead of using public transport they are now resorting to hitch-hiking and other things,” Rathokoane said.
Thato Setati, the owner of TSK Construction, said the constant petrol price increases were a burden to his business.
“We have about 20 cars on our books and we spend a good R20000 a week on petrol. Our cars are always on the road getting material and other things. This latest increase will shoot up costs to 10%. This will affect our overheads,” Setati said.
He said his company was thinking of alternative ways to save money, instead of retrenching workers.
“If I increase my prices and my competitors don’t, then I will price myself out of the market. But I am not ready to retrench my staff now. I have trained these people over the past nine years, and they are good. Clients know our good work,” Setati said.
Economist Azir Jammine said the financial burdens were a result of the past seven years of being in a recession.
“We are in a full-scale recession at the moment.
“Essentially the fuel price increase involves consumers, according to my calculation, having to spend R3.70 extra for every R1 000 they have.”
But Jammine said he was hopeful there would be a price decrease soon. “It could happen next month, depending what happens to the rand and the oil price. The rand has rallied significantly, and if it improves further it might go down.
“The oil price is very difficult to predict because it is a victim of the sanctions that (US President Donald) Trump imposed. There is a chance we might see a decrease in November.”
According to Cosatu, estitute and low-income-earning workers will bear most of the brunt of the fuel hike as South Africans sink deeper into debt.
The trade union said the 13 million people who were already struggling to have three meals a day, and the more than 16 million who survived on social grants, would be further thrown into misery. The increase came on the back of 69 000 job losses.
“What the country is facing is a high cost of living because prices are forever going up. Most workers are highly indebted and use 15% of their salary on transport. Salaries are shrinking and that means there will be a gap for loan sharks, and more people will be blacklisted. Once that happens it means many people will not be able to take part in the economy. It’s bad news all round,” said Cosatu spokesperson Sizwe Pamla.
The DA is calling on the government to cancel the fuel levy as a way to unburden motorists.
“The solution is simple. We must review the burdensome levies on fuel with the aim of reducing them by at least R1 in the short term. This will ease the burden on South Africans. It is possible to fund any shortfall created by this cut through sensible fiscal reform,” said DA spokesperson Solly Malatsi. “By trimming the bloated cabinet and reforming state-owned entities, and by making a serious effort to curb government corruption, a cut to the fuel levy is possible.”
But Jammine said it was not as simple as that. “The fuel levy accounts for 5% of government revenue, and if it is scrapped, the government then has to find that 5% elsewhere - either by taxing the rich or increasing VAT or increase company tax.”