SA consumers are in deep trouble – but petrol price drop may help
Statistics show that there are 14 million employed persons in South Africa. Yet, there are 27 million people (nearly double the number of employed persons) who are credit active and have accounts. To make things even more interesting – these nearly 27 million people have 85.23 million accounts between them.
That is a lot of debt for people who have been hit by Covid19 and lockdown!
Statistics also show that at present, approximately 17 million credit active users have not been able to pay their debt installments for a number of months. This number will obviously grow. It has been reported that around 2.2 million people lost their jobs during the first 3 months of lockdown already.
The fuel price decrease announced for October could be a welcome relief for distressed consumers ahead of the start of festive season shopping if the rand survives global market volatility.
The Department of Mineral Resources and Energy has published the official fuel price changes for October, showing a decrease across all grades from Wednesday 7 October 2020.
Motorists will pay 32 cents less per litre of 93 octane.
Diesel plummeted by 93 cents a litre.
Paraffin decreased by one whole rand.
The Automobile Association, however, warned that despite the favourable conditions for fuel prices, consumers should not get too comfortable.
“It is too early to tell whether the spikes in both the rand and international prices were a blip or the start of a more sustained reversal. But motorists should continue to be wary given the ongoing instability in both local and global economies,” the AA said.
South African consumers have been severely affected by the impact of the lockdown restrictions. This resulted in many salaries and wages reduced, temporarily suspended or terminated.
Investec’s chief economist Annabel Bishop said the rand could be affected by the deterioration in government finances and a risk of a debt default.
The weakening of the rand could push the fuel price further to unsustainable levels and bite the little income at disposal of households.
Bishop said the rand would not see the R13.88 to the dollar levels it enjoyed in early January this year or next, or even in the medium-term again.
South African households are set to remain under pressure for many months to come. And consumers are urged to look at debt relief options to lighten their financial burden.