Walking backwards on fuel

2013-03-06 00:00

SCORES of South African households will feel like they are walking backwards financially following the latest hefty petrol price increase, which kicked in last night.

This is the view of the chief economist of Investment Solutions, Chris Hart, who told The Witness yesterday that the latest 81 cents a litre hike will add to transport and food costs in the coming months.

The chair of the National Consumer Forum (NCF), Thami Bolani, told The Witness that some South African families will struggle to put food on the table following a series of price hikes over the past year.

Higher global crude oil prices and a weakening Rand led to the latest price hike.

The wholesale price of diesel increased by 58,38 cents a litre today.

There will be further pressure on motorists next month.

Finance Minister Pravin Gordhan — in the recent national budget — announced a hike in the fuel levies amounting to 23 cents a litre, effective in April 2013.

This included eight cents per litre for the Road Accident Fund levy.

“The best we can hope for is a stabilisation in petrol prices.

“The hikes, and the weakening rand in particular, will impact on the price of transport, food and other imported goods. Food and fuel are rising above the level of the average inflation rate and salaries are generally adjusted at the average inflation rate. So most households see themselves going backward financially,” said Hart.

Bolani said the latest increase is “massive”. “It will hit the poor and middle-income earners particularly hard. These increases mean that the standard of living of most people in the country will deteriorate.

“Most South Africans earn a relatively low wage and won’t be able to withstand the increases. It will be worse for people who are already over-indebted,” he said.

While the latest petrol price hikes (41 cents a litre in February 2013 and 81 cents a litre in March 2013) will have an impact on consumer inflation, Hart said inflation will not rise to a level that prompts an interest rate hike.

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