The consequence is that the ordinary South African now carries a heavier load into 2025, at a time when financial relief is desperately needed, CEO of Debt Rescue, Neil Roets said. File image.
South Africans will end the year the same way it began for them, by battling the cost-of-living crisis.
This comes after a fuel price increase was announced this past week, making it two consecutive months of increases.
To add salt to the wound, Statistics South Africa, announced that the country’s economy contracted in the third quarter of 2024.
The Department of Petroleum and Mineral Resources (DMRE) hiked both grades of petrol by 17 cents a litre.
Diesel users will have to tighten their belts even further as the price of diesel continues to escalate, rising by between 54 and 55 cents per litre.
This meant that illuminating paraffin, a vital resource for many low-income households will also increase by approximately 39 cents per litre, dimming the festive lights considerably for the vast majority of the nation.
“This is bad news all round for South Africans,” CEO of Debt Rescue Neil Roets told Business Report.
“The diesel price hike will inevitably have an impact on general inflation as higher input costs will likely lead to inflation at retail level, which will, in turn, influence interest rates. As always, it is the consumer who bears the brunt of these decisions,” he points out.
While economists and other authorities predicted another petrol price hike in the weeks leading up to the announcement, they did an about-turn earlier this week when the Central Energy Fund (CEF) data suggested a reduction of around 5 cents per litre for unleaded petrol.
The Automobile Association attributed the divergence in petrol and diesel price trends to varying factors influencing the global markets, significantly the fluctuations in the international product prices of unleaded fuel since mid-November, with international petrol prices showing consistent declines, while diesel prices continue to climb. In addition, the depreciation of the rand following Donald Trump’s US election victory has also contributed to the outlook turning negative.
“Regardless of the factors contributing to the latest petrol and diesel price hikes, the consequence is that the ordinary South African now carries a heavier load into 2025, at a time when financial relief is desperately needed,” Roets said.
“The other major contributor to the financial burden of South Africans, especially those who are still able to afford to buy houses and cars, and those who have credit and store cards is the consistently high interest rate. Despite the small cuts we have seen thus far, there has been very little impact on consumer budgets.” Roets further added.
“South Africans are in deep trouble, and the warning signs have been flashing throughout the year. We are becoming a nation of dependants with middle to upper-income earners drowning in debt and dependent on loans and credit cards, while lower-income earners contend with the double-barrelled threat of hunger and food poverty,” Roets said.
Recent shocking results from the latest National Food Security Survey reveal that nearly two-thirds (63.5%) of households currently struggle to access adequate food, with many cutting down on the number and quality of meals and they prepare daily.
“Hunger and food poverty is a real threat to the nation as the year draws to a close,” Roets said.
“It is unacceptable that two-thirds of the nation are currently unable to make it through each month without compromising on the quality of food served at the dining table, with many turning to credit cards to buy basic necessities. We simply cannot allow this to become our ‘new normal’.”
With Statistics SA figures for South Africa’s gross domestic product (GDP) for Q3 2024 coming in below expectations, showing a decline of 0.3% for the third quarter, Roets said there is a serious impact of this on the average consumer, who is already grappling with the high cost of living and financial insecurity.
“This is particularly worrying in the context of persistently high unemployment,” he stated.
“My advice to those who find themselves in a debt trap is to seek help through debt review, where a registered debt counsellor can assist you to manage your financial predicament. It is never too early to ask for help,” Roets further said.
BUSINESS REPORT