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Johannesburg - Hard times lie ahead for heavily-burdened consumers as fuel prices shoot up again on Wednesday, and the situation is compounded by ever-rising food prices and the prospect of higher interest rates.
Petrol goes up 23 cents a litre to R7.24c, the highest price yet, the department of minerals and energy said on Friday.
Consumer inflation rose to 6.3%, breaching the Reserve Bank's targeted 3-6% range for the first time in almost four years. Economists say a hike in the lending rates appears unavoidable, with some predicting a rise of up to one percentage point.
Any rates increase may be the right tonic to stem consumer appetite for debt as Reserve Bank figures, also released last week, showed that demand for credit was still on the rise in March.
Such an increase will push up the cost of financing debt, with homeowners having to pay significantly more on their bond repayments.
The Reserve Bank is expected to announce its decision on interest rates direction on Thursday.
The severe drought arresting SA has also forced increases in the prices of basic foodstuffs.
The Agribusiness Confidence Index, developed by the Agricultural Business Chamber (ABC) and the Industrial Development Corporation (IDC), recorded a 50% decrease in the confidence of the sector for the second quarter.
According to agricultural economist Lindie Botha of the ABC, the main reason for the drop in the confidence index is the severe drought prevailing over large parts of the country.
She said the South African Weather Service data showed that southern Africa had recorded the worst El Nino-induced drought in 40 years.
Rian Coetzee, head of the food, beverages and agri-industries business unit at the IDC, said the direct and indirect impact of drought were much wider and would have social, environmental and economic repercussions.
"The impact of a drought and its ripple effects can also be long-lasting, even after climatic conditions have improved. For instance, such impacts are recorded through food price inflation and a drag on economic growth figures," he said.
Anton Kruger, chief executive of the South African Ostrich Business Chamber, warned that the increase in fuel prices, additional to the effect of the drought, would negatively affect the income of agribusiness and farmers in months to come.