FROM MIDNIGHT tonight, consumers will pay more for fuel and should brace themselves for further increases, including in meat prices, by the end of the year, experts say.
The price of petrol will increase by 44 cents a litre and diesel by 22 cents.
Gwarega Mangozhe, the chief executive of the Consumer Goods Council of South Africa, said the higher fuel price, which was linked to the weakening of the rand, would inevitably impact on disposable household incomes which were already under pressure.
“Consumer spending is subdued and some of our members have noticed a change in shopping habits as consumers search for bargains, while some are prioritising their overall spend on groceries in light of tighter disposable incomes.
“While we remain confident that many of our members will experience a fairly busy festive trading season, the overall outlook remains uncertain given the predicted low economic growth.”
Momentum economist Sani- sha Packirisamy said the 43c/l under-recovery in the price of petrol last month was largely a function of a 1.7 percent depreciation in the rand against the dollar between August and September and a 0.4 percent up-tick in average monthly international oil prices.
She said the Organisation of the Petroleum Exporting Countries (Opec) caused a 7 percent rise in international oil prices late in the month owing to a largely unexpected agreement by Opec to cut production levels.
“If oil prices persists at these levels there could be a further increase in petrol prices next month, should the rand stay at similar levels as well.”
The rand was also under pressure from heightened fears around a sovereign ratings downgrade by Standard & Poor’s rating agency in December on the back of weak growth fundamentals and policy incoherence, she said.
Standard Bank economist Kim Silberman said the outlook for the remainder of the year was for the petrol price to continue to rise, which would add pressure to consumers’ disposable income.
“However, the effects of the fuel price are far broader than that and will most likely feed through to the price of public transport and the general cost of producing goods and services.
We expect meat price inflation to accelerate in December,” she said.
Neil Roets, chief executive of debt management firm Debt Rescue, expected further increases in the price of fuel towards the end of the year.
“The ongoing political bickering within the ANC and an extremely sluggish economy is likely to impact on the rand and it looks as if the price of crude oil may also be on the rise,” he said.
Roets said one of the major effects of the fuel price increase on the economy would be the continued rise in the price of food.
