Fuel hikes expected in the coming months will lead to more financial issues. Photo: Karen Sandison/African News Agency (ANA) Fuel hikes expected in the coming months will lead to more financial issues. Photo: Karen Sandison/African News Agency (ANA)
Durban- It is likely that September will bring with it not just Spring but a substantial price hike in the prices of petrol, diesel and illuminating paraffin according to the chief economist at Efficient Group Dawie Roodt.
Even though petrol will be increased by only one cent per litre and diesel marginally cheaper at four cents per litre for August it will only bring little relief to deeply indebted consumers say experts.
“If we see this against the background of South Africa’s spiralling unemployment and rising levels of poverty as well as the fact that growing numbers of protesters are taking to the streets we are looking at serious problems for President Cyril Ramaphosa down the road,” said Roodt.
Neil Roets expert in debt management and the CEO of Debt Rescue, a counselling company in South Africa said the fact that the fuel price remained largely stable would spare consumers from the impact of another double-digit increase but he felt that the stability was merely a temporary respite.
“Depending on how the currency performs over the next month 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 September,” Roets said.
He added that South Africa’s continuing junk status classification by the major ratings agencies means the local economy and hard-pressed consumers, in particular, are in trouble.
“Growing civil unrest has become a fact of life adding yet another negative factor to the growing plethora of economic pressure points making life even harder for working men and women,” Roets said.
Roets added that the downgrading of GDP growth by Reserve Bank governor Lesetja Kganyago from 1.7% to 1.2% was deeply troubling showing clearly that there were no reasonable prospects for any meaningful growth this year.
“The government is between a rock and a hard place as state spending is spiralling while tax receipts are dwindling. It is also now becoming clear just how ruinous state capture was and the enormous damage it did to the economy,” said Roets.
According to Roets consumers had collectively notched up a debt burden of more than R1,37-trillion in outstanding debt that had not been repaid.
“More than half of consumers are three months or more in arrears with their repayments and this figure is expected to keep climbing steadily as South Africans are getting deeper and deeper in debt,” he said.
He felt that while the promises of major investments in the South African economy by Saudi Arabia and China are to be welcomed these were loans that one day would have to be repaid.
Roets said Debt Rescue and most other debt counselling firms were showing double-digit growth rates because so many more consumers were getting into trouble and were compelled to seek relief by going under debt review as a last resort.
“We have gone way past the point where consumers who aspire to join the ranks of the middle class can dream of achieving that goal. The new aspiration is to put sufficient food on the table to avoid family members going to bed hungry and the latest round of price increases are going to substantially aggravate that situation,” said Roets.