Economists are not holding out much hope of inflationary relief in the short term, with Investec Chief Economist Annabel Bishop predicting that South Africa’s inflation rate is likely to average above 4.0% year on year, with the Monetary Policy Committee noting a number of risks to the 2025 outlook, including the geopolitical environment.
The start of the new year was met with a fuel price increase for consumers, putting a damper on the festive cheer that many experienced.
This comes after the Minister of Mineral and Petroleum Resources announced the fuel price adjustments that came into effect from 1 January 2025, with a litre of petrol costing between 12 and 13 cents more.
The increases in fuel for January is listed below:
"International factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including importation costs and shipping costs, among others," the Department of Mineral Resources and Energy said.
The DMRE said that the average brent crude oil price increased slightly while the average international product price of petrol followed the increasing trend of crude oil, and the prices of middle distillates decreased slightly because of higher inventories for the winter season in the Northern Hemisphere.
Neil Roets, CEO of Debt Rescue said this is very bad news for consumers who already carry the financial burden of 2024 into the new year.
He said there is no doubt that a growing number of credit-active consumers are relying on their credit cards to cope with the rising cost of living and income that is not keeping up with this.
Roets said, “The announcement of a second consecutive petrol price increase has dampened the New Year cheer for millions of South African motorists and commuters, who will need to dig even deeper to fill their tanks and cover transport costs in the months ahead.”
“South Africans are buckling under the financial weight of relentless price hikes in essential services such as electricity and water, while food prices remain at distressing levels, placing nourishing meals beyond the reach of millions of households. Consumers will be turning to credit to make ends meet in January, further entrenching the annual ‘Januworry’ trend of entering the year with more debt,” he further said.
Economists are not holding out much hope of inflationary relief in the short term, with Investec Chief Economist Annabel Bishop predicting that South Africa’s inflation rate is likely to average above 4.0% year on year, with the Monetary Policy Committee noting a number of risks to the 2025 outlook, including the geopolitical environment.
She noted that the MPC mentioned at its November (2024) meeting that the current “risk outlook requires a cautious approach”, with risks to higher global interest rates on increased protectionism, and so a weaker rand, which is inflationary for South Africa.
“This is a glaring red flag,” Roets said.
“There is no doubt that a growing number of credit-active consumers are relying on their credit cards to cope with the rising cost of living and income that is not keeping up with this. The sad fact is that for most South Africans there is little other option right now. Then there are also the many millions who simply go without each month, when the money runs out. This is simply not a sustainable situation, and should evoke deep concern among our leaders. A solution is urgently needed,” he added.
“My advice to those who cannot break free from their debt cycle is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets said.
BUSINESS REPORT