Support will haunt consumers

The fact that the gov­ern­ment has by ar­ti­fi­cial means sup­ported the fuel price to keep it well be­low the 23c-25c a litre that had been ex­pected will come back to haunt con­sumers in months to come says econ­o­mist Dawie Roodt.

“There is a set for­mula that the en­ergy depart­ment and econ­o­mists use to cal­cu­late the fuel price on a monthly ba­sis tak­ing into ac­count the rul­ing in­ter­na­tional price of crude oil and the value of the rand cur­rency against the dol­lar,” said Roodt.

“There is a set for­mula that the en­ergy depart­ment and econ­o­mists use to cal­cu­late the fuel price on a monthly ba­sis tak­ing into ac­count the rul­ing in­ter­na­tional price of crude oil and the value of the rand cur­rency against the dol­lar,” said Roodt.

“By cir­cum­vent­ing this method­ol­ogy and lim­it­ing the price in­crease to 4.9c a litre and keep­ing the diesel price un­changed, there is the very real risk that the in­creases for months to come will be higher than would oth­er­wise have been the case.”

Debt Res­cue CEO Neil Roets says while the tem­po­rary re­prieve is wel­come, it would be un­re­al­is­tic to look at this as a “gift from gov­ern­ment”. He says SA’s econ­omy is at one of its weak­est points, pres­sured by a weak­en­ing cur­rency and grow­ing un­em­ploy­ment.

Debt Res­cue CEO Neil Roets says while the tem­po­rary re­prieve is wel­come, it would be un­re­al­is­tic to look at this as a “gift from gov­ern­ment”. He says SA’s econ­omy is at one of its weak­est points, pres­sured by a weak­en­ing cur­rency and grow­ing un­em­ploy­ment.

“De­pend­ing on how the cur­rency per­forms over the next few months and given that there is strong pres­sure by oil pro­duc­ing coun­tries for a hike in the price of crude, we could be look­ing at dou­ble-digit in­creases again in Oc­to­ber and Novem­ber,” he says.

Roets says the fall­out from Don­ald Trump’s trade war with China and the Euro­pean Union is al­ready hav­ing an ef­fect on SA’s econ­omy.

“We see this on a daily ba­sis with clients com­ing to us to be placed un­der debt re­view be­cause they were no longer able to ser­vice their debt. Grow­ing num­bers of them have had to ac­cept lower wages in or­der to avoid be­ing laid off or were fac­ing re­trench­ment down the road.

“We see this on a daily ba­sis with clients com­ing to us to be placed un­der debt re­view be­cause they were no longer able to ser­vice their debt. Grow­ing num­bers of them have had to ac­cept lower wages in or­der to avoid be­ing laid off or were fac­ing re­trench­ment down the road.

“The harsh re­al­ity” is that con­sumers have col­lec­tively notched up a debt bur­den of over R1.37-tril­lion.

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