Hikes: how bad is it?

2010-03-27 00:00

CONSUMERS face a barrage of price increases across a variety of products and services over the next few months, significantly lifting the cost of living, despite the current low interest rate environment and a less harsh consumer inflation outlook.

The price increases apply to a range of products and services. These include fuel, electricity, insurance, paid-television services, sin taxes (alcohol and cigarettes), other levies, municipal services, as well as costs pertaining to domestic workers in private households.

Ultimately, the onslaught of price increases will affect the lifestyles of ordinary residents.

Administered prices — the prices of goods and services provided by entities owned by the government — are a major cause for concern.

Administered price inflation in February 2010 was almost 13%, with regulated administered price inflation coming in at almost 15%.

Rising transport costs will come to the fore in April.

Analysts expect the petrol price to increase by about 50 cents a litre at midnight on April 7, taking the price of 95 ULP petrol on the coast to about R8,37 a litre.

This represents a 17,4% year-on-year increase from R7,13 a litre in April 2009.

The 25,5 cents a litre increase in fuel taxes — announced in this year’s annual budget by Finance Minister Pravin Gordhan — will come into effect.

The upward movement in international oil prices during the accounting period has also contributed significantly to the anticipated fuel price hike.

In addition, the South African National Roads Agency Limited (Sanral) toll fee hikes, which came into effect earlier this month, mean that drivers will fork out R319 at toll plazas for a return trip from Durban to Johannesburg.

The cost in toll fees of a return trip from Durban to Johannesburg was about R300 in 2009 and R267 in 2008.

Eskom’s 24,8% electricity tariff hike will come into effect on April 1.

Municipalities are expected to announce their tariff adjustments in a few months.

Assuming that the municipal escalation is about eight percent, residents will fork out about 35% more for electricity when Eskom’s 24,8% tariff hike is considered, according to Pietermaritzburg economist Clive Coetzee.

Municipalities will also review water tariffs and property rates.

“Services inflation” has also been a problem for consumers. This figure was almost seven percent in February 2010.


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