New status could cause an increase in fuel prices

A cabinet reshuffle, a new junk status for the economy, all these could mean that consumers will have to fork out more to fill up.

After the recent junk status downgrade by a number of major ratings agencies, it predicts that the first blow to consumers will be felt with the fuel price increase in May.

The rand is currently standing at 13.37 to the US Dollar. According vot Debt Rescue, we can expect an increase of 42 cents per litre of petrol, and 39 cents a litre per litre of diesel.

CEO of Debt Rescue, Neil Roets, said the increase would have an immediate impact on most other goods and services because the South African economy was largely powered by diesel and all goods transported by road would reflect this increase.

“For Malusi Gigaba and other members of president Zuma’s inner circle who played down the downgrade, the harsh reality of life is beginning to kick in. The fuel increase is just the first of the dominos to fall. Growing unemployment and a slowdown in our already abysmal growth rate of 1.2% will soon follow as foreign investors seek greener pastures.”

The fuel price increase can almost entirely be pinpointed to the drop in the rand, as crude oil prices had actually come down slightly over the past month, Roets said.

“The rand will probably decline further in value against the dollar which is going to impact on everything from fuel to food because although South Africa is more or less self-sufficient in grains, all of the inputs such as fertilizer, pesticides and diesel have to be paid for in dollars,” he added.

“Consumers are already up to their necks in debt carrying a combined debt load of R1.66-trillion. With an increase in the fuel price in May there will be a commensurate hike in the prices of almost everything else because of the heavy reliance on road transport.”

Debt Rescue said that the hikes will severely impact more than half of the South African population who are three months or more behind in their debt repayments.

“We have seen an increase of over 20% over the past several months of the number of debtors approaching debt counsellors for help.”

You can expect to pay the following for petrol:

Fuel type April May
’95 Petrol R13.30 R13.72
0.05% Diesel (wholesale) R11.49 R11.88
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