Durban - Experts have warned following the latest increase in petrol and diesel prices, which will come into effect tomorrow, there is a gloomy outlook for the festive season.
The Department of Mineral Resources and Energy announced on Friday both grades of petrol will increase by 51 cents a litre, while the price of diesel 0.05% will increase by R1.43 a litre and diesel 0.005% will increase by R1.44 a litre tomorrow.
Professor Bonke Dumisa, an independent economic analyst, said consumers should expect a hike in the price of goods.
“Most goods on the roads are transported by trucks and trucks are powered by diesel. It is unquestionable that there will be a multiplier effect where we are going to find the increase in diesel filtering into the price of goods. This will have a negative impact on the consumer as they will be paying more for goods before the December holidays.”
Dumisa added he expected another fuel price hike in December.
“We have to take into consideration the weaker rand to the US Dollar and the fact that we buy Brent crude oil in dollars. This coupled with higher international Brent crude oil prices will mean that there will be an increase in the price of fuel for December.
“There is an increase in demand for Brent Crude oil over the December period. For the South Africa consumer this will mean spending much more when travelling during December, we could also see people rethinking their vacation plans.
“For those people going back to their home provinces during the December holidays, they will find themselves paying much more for transport costs.”
Layton Beard, the AA’s spokesperson, said it was still too early to speculate on the December fuel prices.
“What we do know now is that the fuel price has gone up now and that will have an impact on the consumer. Fuel prices are an input cost for various sectors in the economy such as mining, agriculture and manufacturing sectors, this will undoubtedly be passed on to the consumer who is already struggling.”
Beard added even a small increase in food prices would have an impact on the consumer.
“If you have a look at a basket of essential foods and have a family that is struggling to pay for that, imagine paying R10 or R20 more. It will have a big impact and knock the struggling consumer down more.”
Mervyn Abrahams, from the Pietermaritzburg Economic Justice & Dignity Group, said any increase in the price of fuel would have an impact on the price of food.
“We just have to look at the agricultural sector – farmers require diesel for their operations and when there is an input cost in farming the price of food will go up. We have the December holidays around the corner and can expect to see higher prices with the rising cost of fuel.”
Dr Ntokozo Nzimande, a senior lecturer in the department of economics at UCT, said prices usually go up during the festive season, and now the rise in fuel prices will be an additional burden on consumers.
“To make matters worse, we are not expecting the Reserve Bank to lower the interest rates. In fact, interest rates are expected to rise again. Adding all these issues together, it becomes clearer that this festive season will be difficult for both businesses and consumers. Thus, even the seasonal jobs will not be as much as in the previous years.”