Economist Dawie Roodt believes that the price of fuel in June will spike to its highest level ever.
On Tuesday (15 May), the Automobile Association (AA) said that it South African fuel users are currently facing increases of 74 cents a litre for petrol, 81 cents for diesel, and 78 cents for paraffin commenting on unaudited mid-month fuel price data released by the Central Energy Fund.
However Roodt said that he expects a hike in the petrol price of around 80 cents a litre with diesel spiking at over 90 cents a litre.
“While the Rand is remaining relatively stable right at the moment there is every likelihood of some volatility creeping in if President Cyril Ramaphosa is unable to settle the unstable situation the North West Province where former premier Supra Mahumapelo still seems to be hanging on to his position by proxy,” he said.
Roodt said it was likely that there would be further hikes in the already steep price of crude oil due to possible supply shortages when US sanctions against Iran begin to byte.
“Nobody knows exactly what the full range and scope of US sanctions are going to be, but coming on top of added tariffs against South African steel and aluminium, it is clear that the United States has South Africa in its sights as one of the countries that has persistently been voting against it in the United Nations,” Roodt said.
Consumers hit hard
CEO of Debt Rescue, Neil Roets said that the expected hike in the fuel price – coming on top of record increases in May – will have a massive impact on consumers.
“We can see from the record number of petitioners coming to us to seek relief from their massive debts by going under debt review, that they are at the end of their tether
“Any further increases in their cost of living is going to result in people going hungry – something which we’ve rarely seen in this country before,” he said.
While accepting the fact that the fiscus was broke and that money was desperately needed for vital services such as social grants, education and health, Roets said the time had come for government to do more with less.
“In the absence of hardly anybody having gone to jail for ripping off taxpayers in the Gupta scandal and the many other acts of grand larceny that have been widely reported, it is difficult to believe that our new presidency is going to materially improve our economic situation in the short term.”
Roets said he hoped that some further exclusions would be made when the final decision was taken about what goods and services should have VAT imposed on them.
“We know from bitter experience that when the fuel price spikes, the cost of pretty much all other goods and service increase as well because of South Africa’s heavy reliance on road transport,” Roets said.
“The harsh reality is that we (Debt Rescue) are notching up month-on-month growth rates that we have not seen before because so many more consumers are getting into trouble and are compelled to seek relief by going under debt review.
“That has become pretty much their last resort to hold on to the few possessions that have not as yet been grabbed by predatory debt collectors,” Roets said.
He said more than half of all South Africans were now three months or more behind in their debt repayments.