Hard-pressed consumers are in for another price shock as fuel is expected to skyrocket by up to 70 cents per litre in December.
Independent economist Dawie Roodt said that thanks to the plummeting rand and rapidly increasing crude oil prices, South Africans can expect to pay as much as 70 cents per litre more for petrol in December while diesel will increase by around 60 cents per litre.
“The political and economic instability in South Africa is going to keep our currency volatile. I believe that further increases in the crude oil price are likely with a further decline in the value of our currency virtually inevitable.” Roodt said.
The fuel price increase comes at a time when consumers can least afford it.
More than half of all South Africans are three months or more behind in their debt repayments, collectively owing some R1.71-trillion in debt (latest National Credit Regulator stats).
It is highly likely that the ratings agencies will announce downgrades to our sovereign debt to junk status before the end of the year which will further impact on the rand.
Consumers should brace themselves for hard times ahead and face the fact that all of us are now going to be collectively punished for our government’s inability to grow the economy and create prosperity for all South Africa’s people.
The continuous increase in the diesel price is especially bad news because virtually all consumer goods are transported by road and this will result in higher prices across the board.
We have reached the point where consumers simply have to face the fact that they cannot maintain their lifestyles as they did in the past. It has now become a matter of survival.
Opening more accounts and acquiring more store cards and credit cards is not the answer. The question to ask is no longer do I want this but do I absolutely need this?
According to the respected non-governmental organisation, Oxfam, one in four of all South Africans regularly suffer from hunger.
Year by year our unemployment figure goes up with the World Bank claiming that 27.7% of all South Africans who want to work are unemployed. Even worse is the fact that 39% of all unemployed South Africans have never worked before. Among young people this figure is even higher – at 60.3%. The numbers also highlight that many young people struggle to find their first job.
The gravity of the situation is reflected by the fact that Debt Rescue was showing a year-on-year increase of almost 25% in clients who wanted to go under debt review because they could not repay their debts.
South African consumers have consistently notched up the unenviable reputation as having one of the highest debt ratios as a percentage of GDP among emerging market economies.
Neil Roets is CEO of Debt Rescue.