Fuel price is starting to hurt everyone - a lot
And ordinary South Africans should brace themselves for even tougher times, economists warn
Tight, tighter, tightest.
This seems to be the budget game many South Africans are finding themselves playing after yet another petrol hike.
This week petrol rose by 26c a litre for 93 octane, with 95 octane fuel going up by 23c, while diesel (0.05% sulphur) was hiked 26c per litre.
The Department of Energy attributed the increase to the rand/US dollar exchange rate, the decrease in the prices of crude oil and the import prices of petroleum products.But whatever the reasons, South Africans are finding themselves increasingly cash-strapped – particularly given that this week’s increase came on the back of other, even higher, hikes.
June’s price increase of 82c a litre had already pushed fuel to record highs, and, scarily, another fuel price hike is expected to hit already-reeling consumers hard.
On top of this, VAT increased from 14% to 15% this year. Water, electricity and sewerage increases were announced across the country’s municipalities.
Speaking to Times Select earlier this year, Labour economist Andrew Levy said that unless South Africans were in a dual income household, many would not be able to survive.Levy added that inflation for what people spent most of their money on – transport, electricity and food – was way above salary inflation.
The chief economist at the Institution of Race Relations, Ian Cruickshanks, said nobody would be immune from the latest petrol hike.“There’s no product or service that doesn’t have a travel cost. This increase will affect transport, especially for poorer people. We will also see higher food costs and the next change will be the interest rate, which will almost definitely go up,” Cruickshanks said.
This is not comforting for many South Africans who are already struggling to make ends meet or those who have already cut their budgets.
Roma Doubell, 38, and her partner are a double-income family and responsible for five children. One of her teenage daughters is in a special needs school and this year Doubell has had to inform the school that she was not able to afford school fees.Explaining how price hikes have hit the family, Doubell said that at this time last year she could afford three sixpacks of milk. For the same amount this year, she could only afford one sixpack of milk.“I’m ashamed to say this, but we’ve reached a point where we can’t afford school fees for our daughter in a special needs school. It’s such an embarrassment. As a teacher I understand how important it is and I’m supposed to be able to pay for child, but with all these increases I just can’t cope,” Doubell said.
In addition, Doubell and her fiancé have postponed their wedding. What would’ve been a lavish soiree with all their family, friends and colleagues will now be an intimate affair with only close family and friends. They’ve had to cut their colleagues from the guest list.
“We have to make do with the bare necessities. I don’t know when last we went to the movies; we can’t even afford date nights anymore. And I ask myself whether our new president is really working for us? Because he’s a billionaire, he doesn’t suffer, but as normal South Africans we feel it,” Doubell said.She’s not the only one cutting back on luxuries.
Johannesburg pastor Chris Zeelie said he tries to ride his motorcycle as often as possible because it’s more fuel-efficient.
Having already dipped into their “dwindling” savings, the father of two said he’s had to find ways to turn his hobbies into profitable ventures.
“We’ve had to find hobbies that can pay. I love motorcycles, so now I buy and sell used motorcycles and kits. We’ve also had to cut back on some policies and cancel our DStv subscription.“Where we used to eat junk food once a week, we can now only do that once a month. When we want to watch a movie, we hire a DVD rather than go to the cinema,” Zeelie said.
Also scaling back on going out is Winston Jacobs, the operations manager at Khoi Kreative, who said he has had to cut back on date nights and consider his budget more carefully.
“We used to go to the movies at least once a week, but that changed. We’ve had to halve our entertainment budget,” Jacobs said.
That’s not the only thing he’s cut back on. The avid sneaker-head would often splurge on the latest wear. But he’s had to implement a strict “only if it’s budgeted” rule to avoid “impulse purchases”.
According to Cruickshanks, these ordinary South Africans and many others should brace themselves for even tougher times. While he’s adamant to “put immigration plans on hold”, he’s not too optimistic about the country’s future.“So should we expect things to get worse? Yes. It’s a tough environment for all of us and it doesn’t look like it’s going to get any better,” Cruickshanks said.
Julie Smith from the Pietermaritzburg Justice and Dignity, which does research on household affordability, said: “We are expecting very bad times ahead for South Africans. There is no relationship between the hikes and household affordability for either fuel or municipal services. Fuel, water and electricity effect the costs of all goods and services. The hikes may take time to move through the food value chains; hence we might still see a bit of a delay on direct food price increases but they are coming.”