The 47 cents per litre petrol price increase due to kick in on Wednesday, the rise in electricity tariffs and an almost certain rate hike by the Reserve Bank later in the year were going to have a devastating impact on consumers, CEO of Debt Rescue, Neil Roets, said on Tuesday.
In a statement, Roets said: “The present combination of economic factors is going to severely impact on consumers, many of whom are already deeply indebted.”
Roets said that every commodity consumed in the country was transported by road, and the 49 cents a litre increase in the diesel price is going to impact directly on the prices of essential commodities like food which in turn was going to hit the poorest of the poor the hardest.”
Independent economist Dawie Roodt said consumers should prepare themselves for tough times ahead. “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.”
Roodt stated that this would have an impact on unemployment because without substantial growth, unemployment was simply going to 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.
He said that once they had serviced their mostly overdue debt, very little money was left for essentials like food, clothing, transport and school fees.
“The fact remains that the overall economic outlook remains grim as millions of consumers are unable to service their debt, resulting in ever greater numbers having to seek help from debt counsellors.”
According to the National Credit Regulator’s Consumer Credit Market Report (CCMR), the total outstanding gross debtor’s book was sitting at R1.47 trillion. This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short term loans, pension and insurance-backed loans.