Will the petrol price drop really help consumers?

As of Wednesday, 3 July, motorists will pay 99 cents less than in June 2024 to fill up with 95 Unleaded petrol and just over R1 less than in June this year to fill up with 93 Unleaded petrol.

Neil Roets, CEO of Debt Rescue, says the tiny price drop will not make any meaningful difference in the lives of most citizens.

“Citizens can barely afford to put three square meals on the table every day. South Africans are buying less food because of pressure on household finances – and the first items to go are nutritional food sources,” says Roets.

Consumers facing another increase

Roets believes the money consumers will be saving from the petrol drop will not make any difference, as the decrease comes two days after the municipal tariff increase for electricity.

“The minute drop in the petrol price for July announced by the Department of Mineral Resources and Energy (DMRE) simply adds insult to injury – while South African consumers face an onslaught from all directions as they buckle under the weight of the cost-of-living crisis.”

While he is of the view the price drop will not make any difference, he says any drop in petrol price is welcomed.

“Sadly, it is a drop in the ocean for motorists and commuters who have already been hit very hard by four consecutive hikes in petrol this year, and who now have to contend with yet another massive hike in electricity prices.”

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Petrol prices must be reviewed

The Automobile Association (AA) call on the 7^th administration to prioritise finding sustainable solutions to rising fuel costs by conducting a long overdue and transparent review of the fuel pricing structure.

The organisation remains concerned about the prices which impact all consumers. They have also pointed out that the July decrease marks the first time this year that prices have fallen for two consecutive months.

“Until a sustainable solution to mitigating rising fuel costs is found, citizens will be at the mercy of fuel price hikes,” notes the association.

Growing economic hardship on the way

“As South African consumers remain under pressure, most of their budget goes towards essentials,” says Rodger George, consumer industry leader for Deloitte Africa.

The Deloitte South African Consumer Signal report for Q1 2024 outlines that South Africans are prioritising key expenses such as groceries.

“Deloitte’s report indicates that 87% of South Africans are concerned about escalating costs of everyday goods, with many people resorting to cost-saving measures.”

The report also shows consumers are focusing on essential groceries, reducing food wastage, and 42% of those surveyed are cooking more meals at home.

Deloitte has found that many people have endured years of worry and hardship, and have cut out many luxuries, such as entertainment and annual holidays.

“All they have left to look forward to is the occasional meal at their favourite restaurant – and for those who can no longer even afford this, a takeaway now and then has to suffice,” says George.

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Raise in debt counselling

He says there has been a significant rise in debt counselling enquiries, reflecting a worrying trend in the financial behaviour of South Africans.

“With little relief in sight with regards to living costs, this is likely to intensify as the year unfolds.”

He advises people who cannot find their way out of the debt trap to seek help through debt review, where a registered debt counsellor can assist you to manage your financial predicament,” he says.

“It is never too early to ask for help,” added George.