Consumers warned to tighten their belts

MARCH 3, 2015

Economists have warned consumers to tighten their belts ahead of price hikes - starting with fuel price increases on Wednesday.

The price of petrol will go up by 96 cents a litre and diesel by 74 cents at midnight. Paraffin will go up by 73 cents. The main reason for the fuel price hike is the average increase in the price of crude oil as well as the rand dollar exchange rate.

Economists believe that the fuel price increases will be followed by cost increases across the board – especially for transport and food, and hard pressed consumers will need to start spending wisely.

Local farmers have also warned that poor of rains have damaged this harvest and predicted that the cost of basic food items will go up as grain imports will be needed. 

In April, motorists will also have to contend with an increase of over 80 cents in the fuel levy announced by the Finance Minister, Nhlanhla Nene, during his 2015 Budget Speech in Parliament.

Nene also raised taxes by one percentage point for all working individuals earning more than R182 000 a year.

Economists say this is likely to exert more inflationary pressures on the economy.

Eskom was also granted a municipal electricity tariff guideline increase of 12.20% for the 2015/16 financial year by the National Energy Regulator of South Africa (NERSA). The municipal tariff guideline increase and benchmarks will apply from 1 July 2015.

The increase, however, does not include a possible second “claw back” request by Eskom to recover the additional costs associated with diesel required for running the two open cycle gas turbines for longer than was initially anticipated. NERSA has yet to indicate when it will consider any request from Eskom for a further claw back.

Meanwhile, the Department of Energy believes the price of crude oil would stabilise around the current level with no major price shocks expected soon.