The pain at the pump with a higher fuel price does not seem like much if you earn enough to absorb the increase, but most people do not.
With the fuel price increasing on Wednesday after five months of decreases, South African consumers are facing a bleaker festive season where they’ll have to dig deeper into their pockets to afford the basics.
The Department of Petroleum and Mineral Resources announced that petrol prices will increase by 25 cents per litre for 95 and 93 unleaded, dashing the plans of millions of households who were counting on some relief to afford their year-end trip to spend the holidays with family and friends.
This means motorists will now pay just under R21 for a litre of 93 unleaded at the pumps and R21.30 per litre for 95 unleaded.
Neil Roets, CEO of Debt Rescue, says this fuel price hike could not have come at a worse time.
“South Africans have been trapped in a relentless cost-of-living price increase cycle for most of the year and our coffers are empty as we head towards December.
“The cost of fuel has a huge influence on households’ plans to travel and the upshot of the steeper petrol price is that millions of South Africans who plan their annual trip to visit their families over the festive season will be staying at home this year.”
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Consumers were counting on lower fuel price for rest of 2024
He says consumers have been counting on a steady decline in the fuel price to boost their budgets in November and December and the increase will severely affect the possibility of affording the travelling costs.
“The continual living cost increases have all but decimated the state of household finances over the past few years and with an exorbitant hike in electricity looming large, no discernible relief in interest rates and food prices that keep spiralling upwards, there seems no end is in sight.”
Electricity minister Kgosientsho Ramokgopa’s proclamations that electricity prices are spiralling out of control and that the rising electricity prices are a major problem for the government, followed by his assurances that the government will announce a policy intervention to provide some measure of relief, remain empty words until action of some kind is taken, Roets says.
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Now consumers also have to contend with a water crisis
And as if citizens do not have enough to contend with, South Africa’s water crisis has reached emergency proportions, with water supply outages now a daily reality in Gauteng, while eThekwini in KwaZulu-Natal is also on the caution list.
Citizens are not only urged to use water sparingly as water usage is apparently too high, but also to prepare for the serious socio-economic impact of ongoing water shortages with the government blaming municipalities and vice versa.
However, the 2023 No Drop Report noted that one of the main reasons consumption was relatively high was due to physical losses in municipal distribution systems, due to poor operation and maintenance of infrastructure, such as pipes.
Roets says the elephant in the room is of course the silent threat of unsustainable water tariff hikes for all South Africans in the foreseeable future, while the government warns of an impending countrywide water shortage that harks back to the era of Cape Town’s Day Zero.
According to a study by PowerOptimal water tariffs have surged by an astonishing 2,100% since 1996, while electricity tariffs have jumped by 1,710%.
Roets points out that these increases have consistently exceeded inflation, with electricity prices increasing almost five times faster and water prices increasing almost six times faster.
“As a result, households now face monthly costs that far exceed what their incomes can sustain.”
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Not only higher fuel prices, but higher electricity and water tariffs too
Despite the deterioration in municipal infrastructure, which has led to more frequent power failures and water supply disruptions, the trend of above-inflation tariff hikes for both water and electricity has been entrenched, particularly in the last three years, Roets says.
“With Eskom’s proposed 36.15% tariff increase slated for 2025, households could see their electricity costs rise to an unrealistic R4,015.04 per month.
Add to this the still exorbitant interest rate, and food prices that continue to escalate and never recover despite global price recovery, and it is easy to see how the most pressing question for households across the country is whether or not they can keep up with their soaring utility bill.”
Roets says intervention is urgently needed to arrest the trend in the rising costs of essentials.
“If not, the gap between the cost of necessities and what the average South African household can afford will continue to widen until the majority of the country’s citizens are living below the poverty line. This simply cannot be allowed to continue.”
Roets says all indications point to consumers leaning even more heavily on their credit and store cards to be able to celebrate the festive season in some way.
