The projected increase in the petrol price of around 30 cents a litre is going to peg the fuel price at an all-time high of about R14.20 a litre.
CEO of Debt Rescue, Neil Roets says this is going to add to the woes of deeply indebted consumers. The steep increase in petrol and food prices were the main reasons for the surprise spurt in the January Consumer Price Index (CPI) of 5.8% from 5.4% in December.
Economists expected a rise in CPI to 5.7%.
The petrol price increased by 38 cents and 39 cents a litre respectively in January and February this year.
“We have seen a substantial increase in the number of clients knocking on our doors, seeking relief by being placed under debt review. This is to some degree the result of the general increase in the cost of living but the monthly increase in the fuel price is beginning to play a major role.
“The reality is that because our railway system is broken, every single commodity in this country has to be transported by road and every time there is a fuel price hike, the cost of pretty much everything rises in the line with the fuel price increase.”
Roets says the fact that the next round of fuel increases later this month was going to set a new record high was going to have a major impact on the disposable income of hard-pressed consumers who will face either the option of bankruptcy or placing themselves under debt review.
Dawie Roodt, an independent economist with the Efficient Group, says if the Rand did not deteriorate further, the petrol price for all grades would increase by between 30 to 33 cents a litre, while diesel would increase by about between 25 to 26 cents a litre taking both to historic highs.
Quoting the National Credit Regulator, Roets says there are 9.76-million consumers with impaired records – that is, accounts not paid for three months or more. Total consumer debt was now topping R1,44 trillion (according to Statistics South Africa).
“We are already seeing a dramatic growth in the number of people who are seeking protection from their creditors by going under debt review.”
He argues that rising food and fuel costs and slow economic growth are making it difficult for many South Africans to pay back their loans on time. One in every four South Africans is unemployed and the number of borrowers with impaired credit records – three or more payments in arrears – has risen to nearly 50%.
“The writing is on the wall for many middle class families who have only recently escaped from dire poverty. Many will be pushed back into poverty,” explains Roets.