The price increase in all grades of petrol by more than 40 cents a litre on top of the increase in electricity tariffs and an almost certain rate hike by the Reserve Bank later in the year is going to have a devastating impact on consumers.
The unfolding crisis in Greece will also have an impact as capital outflows will push the US Dollar to ever higher rates against the Rand which will result in higher crude oil prices said economist Dawie Roodt.
93 Octane petrol will increase by 44 cents a litre while 95 octane will increase by 41 cents a litre. Diesel will increase by 4 cents a litre.
Debt expert Neil Roets, CEO of Debt Rescue, said the present combination of economic factors was going to severely impact on consumers, many of whom were already deeply indebted.
“The only good news is the fact that diesel is only going up by 4 cents a litre which will help to keep down the price of goods transported by road,” he said.
Independent economist Roodt said consumers should prepare themselves for tough times ahead.
“We are rapidly approaching an all-time high in the fuel price. With the Greek crisis far from over, this could result in a stronger dollar which will push down the value of the rand which in turn will drive up the price of oil.
“We can reasonably expect a further substantial increase in the oil price in August which will probably take us to an all-time high.”
He said the current increase was caused by the devaluation of the rand and the increase in the oil price. “The ratio is exactly 50/50 – half caused by the increased oil price and half by the drop in the rand.”
Roets said South Africans were already struggling to make ends meet and the latest fuel price increase is going to severely impact on their ability to service their debt load.
“The overall debt that consumers have stacked up during the past several years effectively means that they owe 75% of their net earnings to creditors already,” Roets said.
“Once they have serviced their mostly overdue debt, very little money is left for essentials like food, clothing, transport and school fees.”
“The fact remains that the overall economic outlook remains grim as millions of consumers are unable to service their debt resulting in ever greater numbers having to seek help from debt counsellors.
“Debt counselling remains the best way for consumers to get out of debt in a manageable way paying off their debt in smaller instalments over a longer period of time,” Roets said.
According to the National Credit Regulator’s Consumer Credit Market Report (CCMR), the total outstanding gross debtor’s book is sitting at R1.47tr. This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short term loans, pension and insurance-backed loans.