Rising fuel prices are catastrophic for consumers
November 2021, will see catastrophic increases in fuel prices. The Automobile Association (AA) indicates that higher brent crude prices will see:
- Petrol 95: increase of 98 cents per litre;
- Petrol 93: increase of 96 cents per litre;
- Diesel 0.05%: increase of R1.41 per litre;
- Diesel 0.005%: increase of R1.42 per litre;
- Illuminating Paraffin: increase R1.42 per litre.
According to Sebastien Alexanderson CEO of National Debt Advisors, most South Africans are already struggling to make ends meet, and this huge petrol price hike will see consumers having to use from their already limited disposable income to keep their heads above water. “ It is very likely that we will see petrol cost R20/ litre before year end , and it will have a huge impact on all of us. Significant petrol price increases like these, pushes up the price of all other commodities, as the cost to produce and transport raw materials is increased. This is then reflected in everyday necessities like bread, milk, maize – and virtually anything and everything on store shelves. From seed to plate, we will see rising costs”
The most financially vulnerable, often live far away from city centres and work hubs. This makes transport costs a huge part of their budgeted expenses. A petrol price increase will most likely lead to an increase in the price of public transport costs . Something which struggling consumers can ill afford right now
South Africa is currently experiencing it’s highest unemployment rate, with millions of people dependent on social grants. Fuel hikes this massive, will undoubtedly be putting more people into poverty. With R1.42 increase in illuminating paraffin, the most vulnerable who use it for lighting, heating and cooking will be especially hard hit.
Those who do have an income and who are credit – active have been hard hit by the pandemic and subsequent lockdowns. At the end of Q2 of 2021 –the average arrears debt per consumer was nearly R16 000. The current debt overall stood at at R2. 077 trillion – with over R1trillion of that allocated to unsecured debt.
If consumers have borrowed to the point where they are using bank issued credit cards and personal loans with interest rates of up to 25 % to pay for food and electricity – and are in arrears with their accounts – chances are that they won’t qualify for more debt. Especially since the NCA prohibits credible lenders from from lending money to consumers who cannot afford it.
Trapped in a vicious cycle of debt, consumers will in all likelihood turn to rogue micro lenders and community mashonisa’s – where they will pay up to 100% interest on loans made.
Inevitably, banks are going to start hiking interest rates, and this is never good for consumers. Especially the middle class, who have for while now, experienced a degradation in disposable income.