Neil Roets, Chief Executive of Debt Rescue, said while the petrol price reduction provides some welcome relief, consumers should not view it as a sign that financial pressure on households is easing.
“We at Debt Rescue welcome the 52 cent per litre reduction in petrol prices, but I do not believe consumers should mistake this for a meaningful turnaround in household affordability. The same announcement brings an increase of between R1.23 and R1.38 per litre in wholesale diesel prices, reinforcing our concern that South Africans remain trapped on a damaging fuel price roller-coaster,” Roets said.
He said the unpredictability of fuel prices is becoming a growing problem for households already struggling to manage their finances.
“From my experience working with financially distressed consumers, instability itself creates pressure. Households cannot budget confidently when transport costs fall one month and rise again the next. After months of fuel price movements, many consumers have already absorbed higher commuting costs, more expensive goods and repeated pressure on limited disposable income,” he said.
Roets noted that the diesel increase is particularly significant because of its wider impact on the economy.
South Africa relies heavily on road freight to transport food, fuel and consumer goods across the country. As diesel costs rise, transport and distribution expenses increase throughout the supply chain, with businesses often passing those higher costs on to consumers.
“Diesel is especially important because its effect reaches far beyond diesel-powered private vehicles. South Africa relies heavily on road freight to move food, household essentials and other goods across the country. When diesel becomes more expensive, transport and distribution costs rise throughout the supply chain. These costs are often passed on to consumers through higher retail prices, placing renewed pressure on grocery budgets and contributing to inflation,” Roets said.
His concerns come after consumer inflation accelerated to 5% in June from 4.5% in May, while transport inflation reached 12.7% year-on-year.
According to Roets, these figures demonstrate that fuel-related costs are already eroding household purchasing power.
“This is particularly concerning after consumer inflation rose to 5% in June, from 4.5% in May, with transport inflation at 12.7% year on year. These figures confirm that fuel and transport costs are already playing a significant role in eroding household purchasing power,” he said.
Although motorists driving petrol-powered vehicles will benefit from lower prices at filling stations this month, Roets said many households are unlikely to feel the savings once higher diesel costs begin filtering through to supermarket shelves and other everyday expenses.