‘SA’s economy set to go south with food, rates and power hikes about to slap the poor
CONSUMERS should brace themselves for a tough year ahead following the approval of a 9.4% electricity tariff hike for the 2016-17 financial year.
Experts have warned cash-strapped consumers to expect other items to soar as a result of the latest hike.
Starting from next month, consumers will be paying a 30c additional fuel levy, expect further rises in food prices and more on interest rates hikes.
Initially Eskom applied for a 16% tariff increase on top of the 8% granted by Nersa last year, citing that it wanted to recoup R28bn lost in buying diesel.
“Consumers should brace themselves for a tough year ahead as prices are expected to soar throughout the year,” Neil Roets, CEO of Debt Rescue, said.
He said the 9.4% electricity tariff hike for Eskom will have negative effects on millions of struggling consumers.
“This will have a devastating impact on the already struggling millions of consumers. It will be worse for those who are unable to service their debt,”
While civil society believes the new tariff hike is too high, Eskom said the increase falls short of its requirements.
The power utility was disappointed that Nersa did not grant it the R22.8bn variance it had requested for the costs incurred in the production of electricity.
Roets said the increases given to Eskom will “filter to food, clothes and other goods while the impact on lower income earners will be devastating”.
“This will increase the number of people struggling with high levels of indebtedness,” he said.
Statistics released by the National Agricultural Marketing Council show that the cost of 22 basic food items increased by R44 (+ 8.7 %) from January 2015 to January 2016.
The food basket cost R509 last January and R553 this January.
This will rise further.
Consumers paid R33.73 for a 5kg bag of super maize meal last year and R38.88 this year.
South Africa has 23 million credit consumers and more than 10 million are three months in arrears .
Analyst Clive Ramathibela said 2016 was set to be the “most painful year”.
“This will have negative side effects on lower and middle class consumers.
“It will squeeze some out of the middle class. It will force small business to cut jobs,” he said.
Outa said it would request the full written reasons from Nersa’s decision to approve a 9.4% tariff increase, over and above the previous year’s 12.69% increase, for Eskom for 2016-17.