Debt counselling company, Debt Rescue, says it has experienced a substantial increase in financially distressed consumers applying for debt review over the past few months.
Debt Rescue CEO, Neil Roets said that since the beginning of January there had been a marked increase in the number of consumers who sought relief by going under debt review.
“We have seen an increase of over 20% over the past several months of the number of debtors approaching debt counsellors for help.”
Amid the gloom of economic recession and downgrades by credit rating agencies, consumers can expect some relief in the form of a sharp drop in the petrol price in July thanks to a resilient rand and a declining oil price.
Independent economist Dawie Roodt expects the petrol price to decline between 60 and 64 cents a litre in July, with diesel dropping by around 60 a litre.
“The rand has remained largely stable against the US dollar in the first half of June despite all the political shenanigans that have been plaguing our political landscape.” he said.
Roets warned however, that it could be a very different story in August if the three ratings agencies decide to further downgrade the country’s rand-denominated debt to junk status.
“This could have a significantly negative impact on the currency leading to currency outflows resulting in a higher US dollar crude oil price.”
He cautioned that this drop in the fuel price should not be seen as a windfall.
“We are still technically in a recession with growth well below 1%. The rand will probably decline further in value against the dollar which is going to impact on everything from fuel to food.
“Consumers are already up to their necks in debt carrying a combined debt load of R1.66-trillion. If we see a significant rise in the fuel price in August, this is going to have a substantial impact on the prices of virtually everything and let us not forget that we are technically in a recession with two quarters of negative growth behind us.”
Should the fuel price increase in August, there would be a commensurate hike in the prices of almost everything else because of the heavy reliance on road transport, Roets said.
“It is going to make for a toxic mix that is going to severely impact the more than half of all South Africans who are three months or more behind in their debt repayments.”