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Catastrophic Fuel Increase: What Now?

Author: Sherryn de Vos
Date: 2018-10-03
Wednesday saw the worst fuel increase in South African history hit the country. We took a look at what it means for you.

South Africans woke up on Wednesday morning to a knife twist in the gut. 93 and 95 (ULP & LRP) have both skyrocketed by 99c, sending the price per liter for those living inland past R17. Motorists at coastal regions can expect to pay around R16.49, while diesel is jumping R1.24! We don’t blame you if you couldn’t stomach your breakfast this morning!

Illuminating paraffin (SMNRP) will increase by R1.39 per litre and the maximum retail price of LP gas will increase by R1.79 per kilogramme.

The increase has been described as catastrophic for South Africans. We thought we would take a look at just what it means for your household.

Massive Strain On Ordinary South Africans

Dawie Maree, head of marketing and information at FNB Agric Business, commented that already, household consumption had fallen by 1.3% in the second quarter of 2018. This means that the general spending on everyday items has fallen, with durable goods like appliances, automobiles and jewelry have fallen massively. 

Small business and the poorer households will bear the brunt as their transport costs account for a large portion of household expenditure and the consequence of sustained fuel price increases will further erode disposable income and cause financial stress. This will force a change in spending patterns with a cut in spending on luxury items and frequency of visits to eateries.

This essentially means, that things will be even tighter by Christmas, and South Africans can expect a not-so-festive festive season. Fuel prices are expected to still climb significantly toward the end of the year, with forecasters expecting even harsher economic conditions for the country.

Even the World Bank has estimated, in the Africa Pulse report released on Monday, that the South African GDP expansion will be down to 1% from 1.4%.

The road ahead is bumpy. The tightness of oil supply suggests that oil prices are likely to remain elevated through the rest of the year and into 2019.

Top (Non-Governmental) Tips To Start Saving

Cutting down expenses is now going to be vital and everyone has an idea of what to start with. Leading the pack with the most ridiculous idea is our beloved government, with their top (and very laughable tip) to upgrade your vehicle. So, while expenses are skyrocketing, our revered leader’s idea of saving is spending upward of R100,000 on a brand new set of wheels!

If you don’t believe us, the tweet was looked something like this:

Tip 1: Measure the fuel consumption of your vehicle and consider replacing your vehicle with a more modern, high technology, fuel-efficient product.

Ok. Well, that aside, here are some genuine tips that can cut that monthly spending to get through the month.

Use Ride Share

Getting into work is one of the biggest road costs for anyone and it is becoming more and more popular to share a ride every morning and evening. Not only can you find out if there is someone in the office to share with, but you can possibly post on a Facebook group to find someone. Just make sure that you vet the person before hopping into a car with them!  

Cut The Coffee

Buying coffee daily is really heavy on the pocket. If you buy coffee every work day at say R24 a cup, that’s a total of R480 per month, and around R5 760 per year. Although R480 is really just half a tank of petrol in most cases, it’s still better than nothing! 

Take Lunch To Work

Pre-planning meals for the week, and making sure that you have enough for the work-day is one of the easiest and most effective ways to start cutting wasteful spending. Lunches usually cost around R50 to R75, which in the long run, can cost you up to R18,000 a year!

Just think that R375 can go into that petrol tank every week and get you that much further!

Bulk Buy Your Food

Talking about meals, buying in bulk at the beginning of the month, can save you thousands! Work out your monthly budget and find grocers, butchers and perishable stores that can give you bulk deals.

Buying bulk meat at the beginning of the month, and freezing it will eventually work out cheaper in the long run, when you not making individual trips to the store for dinner.

Stop Going Out So Much

Let’s face it. This is one of the trickiest to do, especially if you are living somewhere like Cape Town, where there is always something on. But the meals out, after-work drinks and take-outs start adding up, and you could find yourself spending thousands on unnecessary outings!  

Reduce Your Insurance Premium

It’s important to note here that we say REDUCE and not cancel! Cancelling your insurance can put you in an even worse position should something happen to you. A car accident can set you back thousands or even hundreds of thousands. If you don’t have the appropriate cover, you could also end up paying for the other parties damages too!

Negotiating your excess or even shopping different insurers could save you a couple of hundred Rand a month!

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