Consumers must spend wisely

2019-04-03 06:01

South Africans are strongly encouraged to tighten the belt in their spending budgets by means of prioritising important items.

This comes in the wake of the ever-rising costs of living, notable with huge price hikes in fuel and electricity, as well as food.

The increase in food prices and other commodities is due to the sharp increase in fuel and electricity prices.

On 7 March the National Energy Regulator of South Africa approved electricity hikes of 9,41%, 8,1% and 5,2% for the next three financial years, far below Eskom’s application for double-digit tariff increases.

The requested increases in electricity were largely opposed by business, labour and civil society in written and oral submissions.

Jacob Modise, Nersa chairperson, indicated that the regulator received 119 000 written comments on Eskom’s application and held public hearings in seven out of the nine provinces.

The petrol price increased again at midnight (03/04) by R1,34 per litre – bringing the new prices to R15,49 per litre coastal and R16,13 per litre inland, respectively.

Diesel 0.05 increases by 76c per litre at the coast and 81c per litre inland, while illuminating paraffin is up by 56c per litre at the coast and 63c per litre inland.

The new price of fuel was announced by the Energy Department with Energy Minister Jeff Radebe attributing the sharp increase to rising global oil prices, a weaker rand and the intro­duction of new fuel taxes.

Fuel prices increased by 7c a litre in February and by 74c a litre this March.

Garnet Jensen, senior director at TransUnion Consumer South Africa, said the ripple effects of these increases would include the increase in price of basic household goods and a reduction in disposable income.

“Most consumers are going to feel the pinch,” he said.

Jensen said the sharp rise increases the prospect of more people with bad credit records. He said findings reveal that over 18 million South Africans have less than perfect credit records.

“Realistically, most South Africans have some of form of credit, be it in personal loans, credit cards, vehicle finance and home bonds.

“To access more credit on top of these during these tough times, one would have to take back control of one’s credit usage behaviour. Swiping a credit card for payment is fast and easy. However, the numbers show that it is not quick or simple when it comes to paying debt back. Of the 25 million credit-active people in the country, 40% are not using credit responsibly.

“It’s clear that we are not managing our credit behaviour very well as a nation or as individuals,” said Jensen.

He said the outstanding amount owed on consumer credit between July and September 2018 was a staggering R1,82 trillion.

“With consumers becoming increasingly cash strapped, the demand for credit is continuing to rise, with credit cards, store cards and bank overdrafts having totaled up to nearly R19 billion,” said Jensen.


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