The Department of Mineral and Petroleum Resources announced significant reductions in the cost of petrol and diesel from Wednesday, reflecting lower global oil prices following progress in efforts to resolve the US-Iran conflict.
However, while the fuel price cuts provide welcome relief, they recover only a small portion of the significant consecutive monthly fuel hikes between March and June, leaving fuel prices substantially higher than they were at the start of the year, according to debt counselling service Debt Rescue.
“Unlike temporary fuel price volatility, sustained increases in food, electricity, transport and municipal charges permanently reshape monthly household budgets, forcing many households to reduce discretionary spending, exhaust available savings and increasingly rely on credit simply to maintain essential living expenses,” said Neil Roets, CEO of Debt Rescue.
Outlook remains uncertain
The outlook beyond July remains uncertain, with renewed attacks in the Middle East over the past week raising the risk of higher international oil prices if tensions escalate, Roets said.
Tension remained high in the region on Wednesday, even as the United States and Iran held technical talks in Doha seeking agreement on the flow of shipping through the Strait of Hormuz and to secure a lasting ceasefire, Reuters reported.
“Consumers often underestimate how quickly international events reach the household budget,” Roets said.
“A sustained increase in global oil prices rarely remains confined to fuel.”
“It steadily filters through supply chains into transport, food production, retail prices and ultimately the cost of almost every essential product consumers purchase.”
“As food consumes an increasingly larger share of household income, financial resilience deteriorates rapidly.”
“This has a disproportionate impact on lower-income households, where food already accounts for a significantly larger share of monthly expenditure. It forces families to make impossible sacrifices in basic nutrition, which ultimately affects health, wellbeing and long-term financial resilience.”