Nicolette Dirk, finance writer, Justmoney.co.za
Consumers will have to brace themselves for another petrol price hike of up to 35c for next month (February 2014). This is according to Efficient group economist, Dawie Roodt, who added that the Rand’s poor performance against the dollar for the past two weeks is the main cause of the anticipated petrol price increase.
This predicted price hike comes shortly after a number of increases. From the 1 January petrol went up by 39 cents and diesel by 32 cents. Meanwhile, on 4 December petrol increased by 17 cents a litre, diesel by 10 cents a litre and illuminating paraffin by 16 cents a litre.
Dr Azar Jammine, chief economist for Econometrix, said December’s increase was greater than expected. “Based on the average under-recovery in the price of petrol over the past month, one had anticipated that the price might rise by no more than 9c a litre.
What should consumers anticipate for 2014?
Roodt said that next month’s Budget Speech could hold even more nasty increases for consumers. "I won’t be surprised if the minister of finance announces that the fuel levy will go up again on 1 April. The fuel price will also likely cause food prices to go up this year as well. And the price of electricity is also set to go up in the next few months,” said Roodt.
How will these price hikes affect struggling consumers?
Mark Cerff, financial consultant at Debtbusters, said the petrol increase will hit consumers especially hard because up to 10% of their salaries are dedicated to fuel.
“Even a R2 to R3 yearly petrol price increase will affect consumers because many of them don’t get salary increases and are already living on the edge,” said Cerff.
When it comes to food price increases, Cerff said many South Africans can hardly afford the basics. The anticipated food price hike will only cause more cash-strapped South Africans to opt for borrowing credit, just to get by.
“In these times, it is important that consumers start saving more. South Africans have the worst saving habits in the world and savings is a good cushion for consumers when prices go up,” said Cerff.
He added that consumers should consider paying off their debt as a first priority and opt for using disposable cash rather than credit when it comes to clothes or other luxury items.
“There are also so many people who drive to work alone. A lift club can cut your petrol cost by half. Public transport is also another way to save money on petrol. If we have fewer cars on the road, there will be less need for dipping into our country’s petrol reserve and could impact the petrol cost,” said Cerff.