It is highly likely that the latest round of petrol price increases being implemented at midnight will be followed by similar increases in November and December.
This is according to independent economist Dawie Roodt who was speaking ahead of petrol going up by R1 a litre, diesel by R1.24 a litre and LPG gas by a whopping R1.79 a kilo on Wednesday (3 October).
Roodt noted that oil dealers now mostly predicting Brent Crude will hit $100 by the end of the year, and with little to no sign of a breather for the local currency, it was highly likely that price increases would continue well into the new year.
This was compounded by the fact that the ANC had weakened the rand through local policy decisions – including the decision to expropriate land without compensation, he said.
“Undoubtedly as the extent of state capture is becoming more obvious at the Zondo commission, this too has had an impact on policymakers at institutions like the World Bank, the IMF and the ever-present ratings agencies who are now more likely than ever to further downgrade South Africa’s bond status to full junk making it impossible for certain prominent investment groups to buy this country’s paper.”
Poorest to suffer the most
Neil Roets, CEO of Debt Rescue, said that while the massive fuel price increase would obviously impact all South Africans – those who will suffer the most will be the poorest of the poor who commute with minibus taxis and who will be paying more for their ride every time the fuel price gets hiked.
“We keep saying that consumers, who collectively owe more than R1.7 trillion in outstanding debt, literally have reached the end of their tether but this is definitely the straw that is going to break the camel’s back.”
Roets said it was highly likely that the local currency would weaken further against the US dollar and that the price of crude was going to spike.
“The northern hemisphere is entering autumn which is when consumers fill up their heating oil tanks causing demand to spike. This, coupled to pending oil sanctions against Iran in November is going to reduce supply which will result in further price increases for crude oil.”
He added that the fallout from Donald Trump’s trade war with China and the European Union was already having an effect on the South African economy.
“We see growing numbers of distressed consumers applying for debt counselling on a daily basis and while we are obviously grateful for the business, this is very bad news for consumers.”
“More than half of all consumers are three months or more in arrears with their repayments and this figure is expected to keep climbing steadily as South Africans are getting deeper and deeper in debt,” Roets said.”
“What is deeply disturbing is the fact that the overwhelming majority of our clients have little or no hope that things will improve anytime soon,” he said.