The repercussions of the price of diesel rising by another 18 cents per litre for the month of July will be felt by embattled consumers in the weeks to come, analysts have warned.
THE REPERCUSSIONS of the price of diesel rising by another 18 cents per litre for the month of July will be felt by embattled consumers in the weeks to come, as logistics firms and retailers pour even more millions of rand into running their generators to keep operations going during load shedding, the cost of which will inevitably be passed on to their customers.
The slight reprieve in the petrol price – a drop of 24c for 93 grade petrol and 17c for 95 – is no cause for celebration as economists have warned that, despite this month’s petrol price cut, the cost of diesel and petrol is likely to rise further heading into the second half of 2023.
FNB senior economist Keketoso Mano said the risk to the rand remained “material” especially when considering local risk events which are still to unfold.
She added that further Opec production output cuts were likely if global growth forecasts disappoint on the slow side.
“Overall, this supports a slight rising trend in fuel prices for the remainder of this year, and we speak with caution given the high volatility that is featured in the data,” she explained.
Neil Roets, CEO of Debt Rescue, is concerned that the increase in diesel prices means that input costs in the agricultural and manufacturing sectors will increase, which will result in higher prices for consumers.
This is over and above the increase in public transport costs, which will hit consumers’ pockets hard yet again.
“South Africans are teetering on the brink of financial ruin, having absorbed months of living cost increases, such as electricity, fuel, food and water – all necessities that they cannot do without. South Africa currently has 30.4 million people living below the country’s upper-bound poverty line, and each increase simply relegates even more millions to a life of poverty,” he cautions.
According to The Department of Mineral Resources and Energy (DMRE), the international prices for petrol and diesel increased during the month, with the latter seeing sharper inflation.
This was despite Brent Crude oil prices decreasing slightly from $75.90 the previous month to $75.10.
However, the rand gained some ground against the US dollar, appreciating from an average of R18.98 in May to R18.68 in June, and this informed the small petrol price cut.
Roets says that any decrease in the price of petrol provides some relief. However, the diesel price increase will stoke inflation across the board.
“Diesel price hikes increase the cost of inputs and supplier transportation, elevate suppliers’ operating expenses, in turn, impacting on customers’ disposable income and living expenses. This locks the country into a vicious circle that can only spell financial disaster for the average South African,” he warns.
“We are seeing more people across the income spectrum turning to credit to get through the month and defaulting on their debt,” says Roets.
“My advice to those who are in a debt trap is to seek help from a registered debt counsellor who can assist you to manage your financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” he concludes.
– BUSINESS REPORT
