As the festive season fast approaches, many South Africans will be feeling the pressure as consumers contend with fuel price increases, navigating their lives through the energy crisis as well as the cost of living crisis.
Earlier this week, the Department of Mineral Resources and Energy (DMRE) announced a third consecutive jump in the price of petrol, which took the price of all petrol grades above the R25 mark.
The DMRE has cited rising international oil prices as the key contributor, with the price of Brent crude oil breaching $90 per barrel this month for the first time since October last year.
The DMRE also said a Slate Levy of around 30 cents had been implemented, which contributed to the unexpectedly steep hike.
The Central Energy Fund’s recent data shows that, in the case of petrol, up to 80% of the increase can be attributed to higher oil prices, which are also responsible for up to 86% of the expected climb in the price of diesel.
“The main driver behind the higher oil prices at the moment is the artificial supply constraints being put in place by oil producing nations (OPEC) and Russia’s ban on the sale of all types of diesel fuel to all countries,” Neil Roets, CEO of Debt Rescue said.
According to a Bloomberg’s analysis, oil futures are set for their biggest quarterly jump since 2022 due to these constraints, with forecasts pointing to a shortfall of as many as three million barrels a day in October.
With the latest petrol price hikes, motorists will pay R25.68 per litre for 95 Unleaded petrol and R25.22 for 93 Unleaded, while commuters will undoubtedly be hit with yet another steep hike in taxi and bus tariffs.
The changes came into effect on Wednesday, October 4.
“The long and the short of it is that hard-working citizens, who have been looking forward to their end-of-year vacation, will now have to think long and hard about whether their budget can accommodate any kind of road trip whatsoever, as fuel prices continue to soar,” Roets said.
“With authorities predicting more fuel price increases in the coming months, this dashes any hope of any kind of reprieve from the relentless financial pressure,” he added.
The Automobile Association says it remains concerning that, in the face of these increases, the government remains silent on its plans, if there are any, on the way forward to deal more effectively with fuel price increases.
Roets agreed, and warned that that this latest fuel price increase will push people to the point of no return, where they are no longer able to enjoy even the simple pleasure of connecting with friends and family once a year.
“At this point, each cost-of-living increase places an ever-growing slice of life out of reach for millions of South Africans, many of whom are no longer able to afford even the basic necessities, like three square meals a day. We need our government to take a stand,” he says.
Congress of South African Trade Unions (Cosatu) acting national spokesperson Matthew Parks said the working class would be the most affected by the latest price hike.
“It may spur inflation, which has been falling, and thus nudge an already excessive Reserve Bank to increase the repo rate once again.”
“Thousands of consumers are turning to credit to make ends meet, and it is deeply concerning that we continue to see a marked increase in people defaulting on their debt, which has prompted some of the major banks to cut back on lending,” Roets added.
This is substantiated by the NCR's Consumer Credit Market Report for Q1 of 2023, which represents the analysis of quarterly data of the South African consumer credit market in terms of the National Credit Act, showing that the number of new credit agreements being rejected stood at a staggering 70.07% during this quarter.
Significantly, 58%, 89 of credit agreements being granted were for those in the income group earning less than R10 000 per month, but in monetary value, the bulk was granted to those earning more than R15 000, at 73.71%.
“With no way to dig themselves out of their financial predicament, people are falling into a deep hole they cannot easily climb out of. My advice to those who are in a debt trap is to seek help from a registered debt counsellor who can assist you to manage your financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets said.
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