It is good news that the fuel price has fallen today, but for most South Africans, this will not make a significant difference as they are so deep in debt and have so little income that they will go into debt with the same bread they eat today.
Mineral and Petroleum Resources Minister Gwede Mantashe announced this week that the price of petrol and diesel will fall. While this is welcome, the reality is that motorists will still need to fork out more, with 93 and 95 unleaded petrol prices decreased by 68 cents per litre, and diesel prices falling by up to R2.75 a litre. The price of diesel dropped from R20.18 to R18.52.
However, most South African households will enter the new year under extreme financial duress, as debt, school fees and essential living costs are daily realities, along with household debt and ever-increasing government income and tax pressure.
Neil Roets, CEO of Debt Rescue, says: “It is not good news for South Africans from all walks of life and for escalating costs of living and millions of citizens in a debt cycle that they cannot escape, while the most vulnerable remain unable to keep their heads above water by the wages or grants that are unable to provide for their families.”
Escalating costs of living have locked millions into a debt cycle
Data from the TransUnion Consumer Credit Index for the first half of 2025 shows that household income has not meaningfully increased at about 62.7% of disposable income, with debt levels remaining elevated.
With TradingEconomics figures, which show the ratio hovering around 63%, we have now entered a phase of high debt-to-income ratios. Statistics suggest that this margin for income growth has been exhausted, leaving households vulnerable to financial shocks.
“The reality is that when debt absorbs such a high ratio of households’ income, unexpected expenses such as school fees, car repairs or rising fuel prices can quickly create financial distress,” Roets explains. “This is fast becoming a national crisis. Consumers are increasingly turning to high-interest, short-term unsecured credit and personal loans to bridge gaps between income and essential expenses.”
A significant number of South Africans are prioritising debt repayments over food and other necessities, placing further strain on households. Roets added that concerning insights from the latest Eighty20 Report for the third quarter show more people are operating at or below survival levels, especially retirees and middle-income workers.
In an effort to relieve the financial pressure, lenders are restructuring or extending loan terms for longer repayment periods. However, Roets said this is not helpful as it means consumers end up paying more in the long run. “As a result, defaulting has become a major threat,” Roets said. “Residential mortgage defaults continue to rise strongly in South Africa, despite significant reductions in interest rates and inflation over the past two years.”
“This indicates that South Africans are still under immense financial strain amid a stagnant economy and elevated unemployment.”