Rising petrol, electricity, rate hikes will drag South Africans deeper into debt

JOHANNESBURG -The 47 cents per litre petrol price increase due to kick in on Wednesday, electricity hikes and an almost certain rate hike by the Reserve Bank later in 2015 will have a devastating impact on consumers, CEO of Debt Rescue, Neil Roets, says. “The present combination of economic factors is going to severely impact on consumers, many of whom are already deeply indebted,” Roets said in a statement.

Roets said every commodity consumed in the country was transported by road, and the 49 cents a litre increase in the diesel price will impact directly on prices of essential commodities like food which in turn will hit the poor the hardest.”

Independent economist Dawie Roodt said consumers should prepare for tough times. “We are in a catch 22 situation now where the consumer, who in the past was the main driver of economic growth, is now being placed in a situation by the price hikes where they will no longer be able to spend the funds needed to boost growth.”

This would have an impact on unemployment because without substantial growth, unemployment will keep rising, driving more consumers deeper into debt.

Roets said South Africans were already struggling to make ends meet and the latest fuel price increase would severely impact their ability to service their debt load.

“The overall debt that consumers have stacked up during the past several years effectively means that they owe 75% of their net earnings to creditors already,” Roets added.

Once they had serviced their mostly overdue debt, very little money was left for essentials like food, clothing, transport and school fees.

“The overall economic outlook remains grim as millions of consumers are unable to service their debt, resulting in ever greater numbers seeking help from debt counsellors.”

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