The continuous increases in the price of diesel inevitably drives the cost of transport and logistics up. And, with roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there will be increases to consumers as the cost to transport goods increases.
AS THE Department of Mineral Resources and Energy (DMRE) announced hefty fuel price increases this week, South Africans also found out that they would be cast into more hours of darkness as Eskom plunged to Stage 6 of load shedding.
The DMRE earlier this week announced a hefty fuel price adjustment for September, which will hit motorists hard at the pumps and possibly affect consumer inflation.
Petrol prices went up by R1.71 per litre and diesel increased by between R2.76 and R2.84 a litre from Wednesday.
This means that the price of 93 Unleaded petrol increased from R22.43 to R24.14 per litre while 95 Unleaded will rise from R22.83 to R24.54 per litre, while diesel increased from R20.52 to R23.28 per litre.
This is the highest that fuel prices have risen since December 2022, when 93 Unleaded was R23.16 per litre, and it is the third-highest fuel price in history, after it reached R26.31 per litre in July 2022 and R24.99 per litre in August 2022.
The significant hike in diesel prices will also increase the costs of running generators for businesses during load shedding.
Abigail Moyo, the spokesperson of the trade union Uasa, said that the hike for all fuels would leave workers and motorists desperate for extra cash to get to work and back.
“While the general inflation rate is moving in the right direction, the higher fuel prices will counteract any relief it may bring. Uasa encourages its members and fellow South Africans to adopt fuel cost-saving precautions,” Moyo said.
She further said that the union advised to avoid travel during rush hours, running errands at nearby locations and combine several car trips into one.
“There is no choice but to adopt our lifestyles, spend less and live within our means,” she added.
BUSINESS SET TO SUFFER
Small businesses are one of the sectors that are going to be hit hard by the increases, according to SME service provider company Lula.
“Money is already very tight for small business owners. Alongside load shedding, they are trying to juggle ever-increasing input and production costs while, at the same time, planning for what should be their busiest time of the year over Black Friday and the Festive Season. Many small business owners might understandably be very concerned right now about how they will manage to keep the doors open,” said Garth Rossiter, the chief risk officer at SME services provider Lula.
“Our advice to small businesses is to revisit their financial forecasts and not to leave it till it is too late. Take into account the increased transport and distribution costs of your products and the impact these will have on your margins, do your projections for the last stretch of the year and base your decisions on the facts,” Rossiter advised.
Meanwhile, another sector that will suffer the brunt of the increases will be the transport sector, according to Gavin Kelly, the CEO of the Road Freight Association.
Kelly said, “Road freight transporters use both petrol and diesel, but diesel is the main fuel in most road operations. Once fuel prices increase, transporters will need to increase their pricing to cover the increased cost of diesel. Whilst this sounds like an ‘easy’ or simple process, there will be transporters who will not be able to increase costs (either they are contractually bound, or they just price themselves out of the market) and thus might not be able to carry on running the business.’
“Whether we like it or not, the continuous increases in the price of diesel inevitably drives the cost of transport and logistics up – step by step. And, with roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there will be increases to consumers (you and I), as the cost to transport goods increases,” Kelly warned.
“That cost will – in most cases – be borne by the consumer. You and I will pay more for – well – everything, from food to fuel, clothing to electronic goods and everything in between. Prices will rise – some immediately, but more so a domino effect will ensue, the next in a long line of such domino effects that we have seen too often in the last few months,” he added.
Meanwhile, Neil Roets, the CEO of Debt Rescue said consumers were at breaking point under the financial onslaught from South Africa’s two largest energy sources powering the economy – fuel hikes and electricity disruption.
The fuel hike comes hard on the heels of the much-protested July electricity price hike that has generated country-wide protests over the past two months. With Stage 5 and 6 load shedding now being implemented ‘until further notice’, further severely disrupting the lives and livelihoods of South Africans and their businesses, the country is on tenterhooks
“There absolutely has to be some respite for consumers soon, and this needs to come in the form of financial relief from Eskom and the Department of Mineral Resources). The financial tsunami emanating from these quarters is wreaking havoc on the lives of people across all income brackets, who are paying the price for maladministration, bad management and corruption. A major repercussion of the petrol price hike is that it will inevitably drive up inflation and this will put even more financial pressure on us all,” Roets said.
– BUSINESS REPORT