There seems to be no end to the pain South African consumers have felt this year, and it seems there will be no reprieve as 2022 draws to a close.
With the petrol price set to increase in November, with both 93 and 95 octane fuel increasing by 51 cents a litre on Wednesday, and diesel set to go up by R1.43, motorists will feel more pain at the pumps.
To add to this, a leading economist from KPMG has said it is likely the SA Reserve Bank’s Monetary Policy Committee (MPC) will be hiking interest rates once again at the final meeting of the year, which will be held later in November.
Frank Blackmore, a lead economist at KPMG, told Business Report on Monday: “From the prevailing data, South Africans can expect a further increase in the repo rate, and therefore the prime rate, from the current 6.25% repo, or 9.75% prime when the MPC meets in November.
“As we have seen this year, there have been large increases in CPI inflation, mostly due to fuel and mostly foods [as a] result of Russia’s invasion of the Ukraine, as well as supply chains globally that are not working as well as they used to, prior to Covid,” Blackmore said.
Listen to Frank Blackmore share his thoughts on a pending interest rate hike and the impact of the coming fuel price increases on consumers in SA:
Impact of fuel increase on farmers
The organisation TLU SA said every resident of South Africa was threatened by the rising diesel price because – with agriculture facing an extra challenge – several farmers were currently uncertain as to whether they could still plant profitably, which compromised food security.
The new planting season has begun, and input costs had generally increased, but another rise in the diesel price might, for some farmers, be the straw that breaks the camel's back.
“There is no doubt that there are several farmers who now must look at the numbers to see if it is still profitable for them to plant with all the input costs that are increasing. The government must realise that there are big problems here if the situation is not addressed,” said Bennie van Zyl, TLU SA general manager.
"TLU SA wants to know what the government will do to stabilise the rising diesel price, keep farmers in production and thus ensure food on people's tables."
Henk van de Graaf, TLU SA regional chair: north, said, “The diesel price is influenced by the increase in the oil price, but also the weakening of the rand. And this is due to poor economic policy and uncertain economic conditions created by the government. It is the government's responsibility to create an environment of confidence so that the rand does not continue to weaken.”
While the rising diesel price – which has gone up by almost R10 a litre since this time last year – is affecting agriculture on a large scale, there are also concerns about the implications for the public in general.
“Economic growth is counteracted, and every resident of the country is harmed. In fact, the government is impoverishing the country's citizens. There is a large part of our population that can no longer afford the basics, and this can result in major negative events,” says TLU SA’s Erika Helm.
The organisation said what was needed was an increase in the diesel rebate.
Hayley Parry, a money coach and facilitator at 1Life’s Truth About Money, also shared her thoughts on the impact of the economic situation on consumers.
Parry told Business Report that it is not looking good going into the festive season.
Listen to Parry’s views below:
BUSINESS REPORT