Being South African right now is like attending an 80’s party. The hits just keep on coming.
This one could be the straw that breaks the camel’s back. According to mid-month unaudited data from the Central Energy Fund, South African motorists could be facing the most unforgiving fuel price hike in the country’s history come October.
The Automobile Association, which has been keeping a close eye on the fuel price data since the beginning of September, reports that a spike in international oil prices combined with repeated blows to the rand will result in a price hike of sadistic proportions.
Yes, you read that right.
According to the data, motorists can expect to pay around R1.20 – R1.30 more per litre as of October, with even further hikes expected in November and December. Diesel users won’t escape unscathed either, with a possible hike of around R1.38 per litre.
Should this increase occur, it will push the price of inland 93 unleaded fuel to within a whisker of R17 a litre. To put that in perspective, back in January we were paying R14.20.
By now, most people are aware that with a hike in fuel comes a hike in pretty much everything else. Public transport and the price of food are the two biggest concerns, along with the price of illuminating paraffin. The price of diesel is also expected to have horrific effects on the agricultural industry, which is already suffering from the drought.
The only way for small businesses or farms to survive is to up the prices on their products and services – and this is catastrophic for the consumer. A hike of this magnitude could very well push the country to financial breaking point and escalate the ‘technical recession’ into a full blown recession.
According to Debt Rescue CEO, Neil Roets, South African consumers have accumulated a collective debt of over R1.7 trillion, outstanding. Consumers are already struggling to honour that debt in the current economic climate, and the price of everything keeps going up and up.
On the prospect of such a price hike, economist Dawie Roodt says:
Roodt says that it could also be the final nail in the coffin when the time comes for ratings agencies to announce their latest ratings for South Africa’s sovereign debt.
If we’re lucky, matters may improve within the next two weeks and we could dodge this cannonball.