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Petrol price shock - April will be tough for SA

Mar 31 2019 17:21
Fin24 Correspondent

April will be a difficult month for South Africa with a slew of price hikes expected to take a punishing toll on consumers and the ailing economy.

Petrol will increase by R1.34 cents per litre for 93 octane and R1.31/l for 95 octane in inland provinces from April. Also kicking in is the General Fuel Levy going up 5c/l and the Road Accident Fund Levy by 15c/l.

"The average motorist uses about 130 litres of petrol so it will now cost about R177 more from their disposable income," economist Mike Schüssler told Fin24.

"For most people this is a lot of money dipping into spending from elsewhere in the economy."

"April will be a difficult month for SA with price shocks and it will not be very good for economic growth," he said.

He explained that not only will it take the inflation rate higher but it will also mean that the second quarter growth rate will be subdued.

This also comes on the back of crippling load shedding that added more strain on the struggling economy.

South Africans will also pay 9.41% more for electricity at the end of April, as announced by the National Energy Regulator of South Africa early this month.

"This price hike comes at an even worse time for those consumers whose electricity is supplied directly by Eskom, as it coincides with the over 9% electricity tariff increase - a double-whammy," Clif Johnston, the deputy president of the South African National Consumer Union (Sancu) told Fin24.

He said fuel price hikes, especially substantial ones, are always bad news for consumers.

"Those with their own vehicles will feel the impact immediately, every time they fill up.... The prices of other modes of transport will also rise in due course as the increased costs work their way though their systems," Johnston noted.

"The same goes for the prices of most other things as well, particularly food where a substantial portion of the costs faced by suppliers is transport-related."

Johnston said Sancu's experience is that some retailers use fuel and electricity price increases as an excuse to hike their own prices immediately, even on existing stocks, before the costs have worked their way through.  

"Our advice to consumers faced with sudden increases in the prices of goods is to shop around, using the internet and advertisements in local community newspapers as guides. If you find the same thing cheaper elsewhere in your local shopping area, buy it there."

From June 2019, the Carbon Tax will also be introduced, adding 9 cents per litre to the petrol price and 10 cents per litre for diesel.

inflation  |  petrol  |  sa economy
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