JOHANNESBURG – Debt counselling firm Debt Rescue expects more newly arrived middle class consumers may be pushed back into poverty by the hefty fuel price increase effective from Wednesday.
The energy department has announced the petrol price is going up 32 cents a litre, while diesel will cost 33 cents more.
Debt rescue CEO Neil Roets says they are experiencing double digit growth in their client list as more consumers are seeking help.
“There is approximately 48 percent of all credit active consumers are over indebted, meaning that they are in arrears with at least three payments on one of their accounts. This will obviously push a lot more consumers into debt.”
Economist Chris Hart says this increase will put even more pressure on households, which are already facing escalating municipal charges.
“Households are coming under increasing pressure, the economy is not great. Consumers simply don’t have the ability to get salary increases needed to compensate for these increases.”
Hart says if the rand doesn’t stabilise the picture will look even worse.
“It’s the weaker rand that has been the main factor. If the rand continues at this level, we are not going to get relief on the fuel price.”
The Energy Department announced on Friday that the petrol price is going up by another 32 cents per litre to its highest ever price.
From Wednesday, diesel will cost an additional 33 cents while illuminating paraffin is going up by 25 cents.
Economist Dawie Roodt says the increase comes as no surprise but it’s slightly higher than expected.
“The main reason has to do with the increase in the international oil price which has increased in the last couple of weeks.”
However, he says the stronger South African currency has brought relief.
“Fortunately for us, the rand has been strong. If it wasn’t for the currency, the petrol price would be higher than what we have.”
This comes after the South African Petroleum Retailers Association (Sapra) on Wednesday said consumers should brace themselves for yet another fuel price increase.
In July, the cost of petrol increased by 84 cents while diesel went up by 78 cents.