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'Many will lose houses, cars'

Johannesburg. - The increase in the retail price of petrol by 55c per litre will result in a "period of anguish" for South African households, an economist said on Wednesday.

ABSA economist Chris Hart said the increase would cause food prices to rise and lead to fuel inflation, which was already above 10%.

Hart said the country was expecting a hike in electricity prices as well as an increase in the rate of taxes in the coming months.

"We will see a period of anguish. A significant number of households will lose their houses and cars because of the pressure of the high prices," Hart said.

Household income would not keep up with the pricing pressure.

The Chemical, Pulp and Paper, Printing, Wood and Allied Workers Union (Ceppwawu) said the effect of the petrol increase on food prices was enormous.

Spokesperson Keith Jacobs said there was a need to have an indaba with government on inflation and rising food prices.

"Although the department of minerals and energy say they do not have control of petrol prices, we are not happy with this increase and would like to discuss the repercussions with them and other government departments," Jacobs said.

Economist Mike Schussler said there was a possibility of a high interest rate hike next month.

He said the petrol increase could lead to the Reserve Bank Governor calling for an emergency monetary policy committee meeting.

South African Reserve Bank spokeswoman Samantha Henkeman declined to comment.

"We do not comment on petrol prices," Henkeman said.,

She would not be drawn to comment on the effect it would have on interest rates.

- Sapa

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