Azra Hoosen | ah@radioislam.co.za
16 February 2024 | 16:00 CAT
2 min read

As South Africa grapples with ongoing economic challenges, consumers are facing yet another hurdle, with a major increase in fuel prices expected in March.

The Central Energy Fund (CEF) has released mid-month fuel data, indicating that prices are projected to surpass the R24/litre mark for both grades of petrol, nearing last year’s record high of R25/litre.

According to the Automobile Association (AA), 95 octane petrol is anticipated to rise by R1.35/litre, with 93 octane following closely with an increase of R1.31/litre. Diesel prices are also set to climb significantly, ranging between R1.43/litre and R1.59/litre, while illuminating paraffin is expected to see a hike of 96 cents per litre.

The expected hikes are primarily driven by international product prices, with fluctuations in the rand/US dollar exchange rate contributing marginally to the under-recovery of basic fuel prices.

With consumers already grappling with economic challenges, the impending fuel price surge adds further strain, highlighting the urgent need for mitigation measures to alleviate the financial burden on households across the country.

Chief Operating Officer at Debt Rescue SA, Annaline van der Poel, said that all signs point to a substantial increase in fuel prices next month, and concerns mount over the ripple effects on the overall cost of living. The impact of road transport costs often leads to across-the-board price hikes, with the likelihood of prices remaining elevated even after fuel costs subside.

“There is a lot of speculation about the budget speech; it is an area of concern. We have no idea what to expect, but the Finance minister has been warning us for some time that government debts are beyond control. We are paying massive amounts in interest, not getting to our capital, etc., so it is not looking positive,” she said.

Van der Poel highlighted that while all income groups are impacted by escalating living expenses, it’s the middle and lower classes bearing the brunt of the burden. With a big portion of their budgets allocated to essentials like food and electricity, the impending price hikes will disproportionately affect these households, exacerbating financial strain.

She warned that turning to credit leads one into a debt spiral, especially when purchasing consumables on credit.

“Many South African consumers have no choice but to rely on credit to afford basic necessities like food. This has led to a significant increase in the use of “payday loans” and store credit cards, which is concerning because approximately 60% of these consumers have no money left in their bank accounts just five days after receiving their salaries, forcing them to turn to credit once again,” she added.

Van der Poel advised consumers that Planning is critical for consumer spending.  “Continue being diligent with your budget, go through your bank statements, review your covers and insurance policies and get rid of unnecessary subscriptions, plan your shopping, and look for the best specials,” she emphasised.

She pointed out that although there is potential for improvement, positive changes are likely to occur gradually, which may not be soon enough for many individuals facing economic challenges.

“Most economists are predicting that we will see a reduction in interest rates by the second half of the year, but there are factors beyond everyone’s control: the macro-economic, what’s going on worldwide and load-shedding; these things do not bode well together either. We will not see big drops even if the inflation rate stabilises,” van der Poel said.

The Automobile Association (AA) urges the Minister of Finance to refrain from increasing the General Fuel and Road Accident Fund levies in the upcoming budget speech on February 21. With consumers already struggling, any relief— even in the form of maintaining current levels — is urgently sought to alleviate financial strain.

LISTEN to the full interview with Ml Sulaimaan Ravat and Debt Rescue SA COO, Annaline van der Poel, here.