Don’t be fooled by petrol price drop

So next week we’ll see the petrol price drop by between 70 and 80 cent, and diesel more than 50 cent. Great news for the consumer and especially those who really need to cut costs to pay off a little extra debt before – yes, I’m going to say it – the Christmas season rolls on by.

Thing is, with the Rand what it is, SA’s economic growth forecast cut to an even lower percentage than what we first thought and the massive drought hammering farmers across the country; things might not be as rosy as we’d like to think.

According to Neil Roets, CEO of Debt Rescue, folks need to take into consideration that many of the country’s ‘economic indicators remain largely negative’.

“It is belt tightening time for the storm that might hit us later this year, as economic growth is going to be way lower than predicted by the government,” Roets told BusinessTech.

Even if the fuel price stays down for a while, the fact that our farms are suffering this year means that the basic price of food is most certainly going up and a weak Rand also pushes up the cost of imports… obviously.

 “Some major issues affecting deeply indebted consumers remain, such as the fact that consumers collectively now owe around R1.6 trillion rand and the fact that more than half of all borrowers are now three months or more in arrears with the payment of their bills.”

 

“The total debt that consumers stacked up during the past several years when unsecured credit was easy to obtain remains a major burden for many. This would be a good time to repay as much of this debt as possible rather than going on a spending spree.”

 

“Currently about 75% of the net income of consumers has to be paid over to creditors which leaves very little disposable income for families to live on.”

According to our favourite economist Dawie Roodt, the drop in the petrol price could have been around one Rand if the currency wasn’t so weak against the Dollar.

 “It is highly unlikely that we will see a further fuel price decrease next month if the Rand remains at current levels.”

Roodt added that South Africa’s own debt and the slowdown in global economic growth – thanks to China’s economic slowdown – is something we should all be worried about.

 “The outlook for consumers in South Africa is grim because of several factors including the massive slowdown in the manufacturing sector which is now officially in recession as well as the threat of major strike action in the gold and platinum sector.”

 

 “We are facing a very uncertain future and South Africans need to be mindful of this and prepare to tighten their belts for the tempest that is coming our way.”

If we’re to weather this storm, the South African government’s going to have to pull a rabbit out of a goddamned hat, which, given their proneness to wasting tax money on private jets and overseas trips, seems unlikely.

“The best case scenario would be a growth rate of 1% while the worst scenario would be a full-blown recession,” said Roodt.

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