Fuel hike to further dampen Xmas mood

2007-12-01 00:00

A 43c petrol price hike next week is the latest blow to consumers already contemplating a bleak Christmas and an even more dismal New Year.

Government’s announcement that pump prices will increase by 43 cents per litre, to R7,23 at the coast and diesel will rise 51c is likely to stretch already stretched year-end budgets. With a petrol price increase comes increased food prices.

According to data released by Statistics SA this week, inflation soared to 7,3% year on year in October. Food was the major contributor, adding 3,4%. Food inflation has increased by more than 12% in the past year.

Based on inflation figures that are above the stipulated three to six percent, Reserve Bank governor Tito Mboweni has no surprises in his sack for Christmas and an interest rate rise next week is as good as certain. This will impact on bigger ticket items, significantly limiting spending.

According to an annual festive season retail sales survey conducted by Stellenbosch University on behalf of Ernst and Young, retailers are as glum as consumers.

“With another 50 basis points expected from the Reserve Bank’s Monetary Policy Meeting next week taking prime to 14,5% and high food and fuel prices set to remain, there is more than an even change of overkill,” said Luke Doig, senior economist for the Credit Guarantee Insurance.

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