Cost of living rises as fuel prices climb by over 20% since January. Dramatic increase in clients on the verge of bankruptcy; Debt Rescue weighs in

The fuel price has a considerable knock-on effect on the cost of living as so much depends on fuel, not least the transportation of goods which is immediately felt on consumers’ pockets. So with a 91 cents increase coming into effect from August 4th for petrol and 55,58 cents for diesel, consumers need to once again brace themselves for a series of price increases.

This follows the trifecta of increases experienced last month thanks to the combo of fuel, rates and electricity hikes. This month also sees the introduction of a Slate levy as Government announces a shortfall of R535.1-million. A Slate levy is applicable on fuels to adjust a negative Slate account balance.

“All in all, since January we have experienced a price hike of over 20%, with petrol climbing 23% in just eight months. This is an extraordinary increase and consumers will feel the brunt of it at the till-point, with the direct impact on the cost of transport, as well as the indirect impact on the cost of goods” says Neil Roets, Debt Rescue CEO.

The Slate levy, which is included in the new price increases at 6.58 cents per litre, puts additional pressure on everyday costs.

“Following the disastrous shut-down of the economy thanks to Covid-19 we need this like a hole in the head at the moment,” he said. “While we fully understand that this is outside the control of government, it is nonetheless going to slow down any hopes of a revival of South Africa’s economy battered by the ongoing lockdowns and the recent riots.”

Thanks to these ever-increasing cost increases, Roets said there had been a dramatic increase in clients on the verge of bankruptcy seeking help from debt counsellors.

“We have seen a dramatic increase in the number of over-indebted consumers seeking assistance. Most have been relying on expensive credit for everyday items and many are receiving default notices and are facing impending legal action now that the payment holidays have come and long gone and creditors are expecting payments. With 34% of South Africans having lost their jobs, 22% being retrenched and 17% receiving a pay cut (Debt Rescue Survey April 2021) and the official unemployment rate at 32.6%, this is not surprising,” says Roets.

During the hard lockdown period in 2020, thousands of South Africans applied for payment holidays on their debt repayments, when they weren’t earning their full or even any income. While this provided some form of temporary relief, many are now expected to catch up on those arrears payments which is pushing many South Africans further into financial difficulty as they battle to pay their bills. Given almost half have used up all of their savings since the start of the pandemic (Debt Rescue Survey July 2021) and 28% did not have any savings to start with, it leaves them in a very difficult position to meet these expectations.

He said the process of debt counselling that was introduced more than a decade ago made it possible for debt counsellors to negotiate with creditors to obtain a longer repayment period with smaller repayments without losing assets like homes and motor vehicles.

“With the cost of living rising so exponentially it can be hard to make ends meet. Yet South Africa is the only country in the world where home loans can be placed under debt review. If a consumer is in trouble, they’re advised to seek professional help from a debt counsellor before any possible legal action is taken,” concludes Roets.

Read the whole article here: https://bit.ly/3y3MAqX

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