Empty pockets ahead: Petrol price hike a blow to SA’s ailing economy

While motorists brace themselves for a hard October, poor households and the working class should brace themselves for an even harder last three months of 2023, and rough beginning to 2024.

This is according to experts and union federation Cosatu. Following the latest petrol and diesel projections from the Central Energy Fund (CEF), although slightly better, it will leave a dent in every South African’s pocket from the fuel prices, to food prices, inflation and most likely even the repo rate.

Petrol price ‘bad news for all’

Cosatu has called on government to act decisively to intervene on behalf of workers and poor households, noting the increase of petrol price by 75c, diesel by R1.60 and paraffin by R1.50 “spells bad news for all South Africans, especially the working class”.

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“It may spur inflation, which has been falling, and thus nudge the Reserve Bank to increase the repo rate once again,” Cosatu acting national spokesperson Matthew Parks said.

“Poor households are already struggling to survive under these difficult conditions and an increase in the price of paraffin will leave many poor families worse off. This increase in fuel prices creates a level of hardship for a society already suffering from high levels of unemployment and stagnant or declining real wages.

“Low and moderate income families are plunging further into debt because their wages are inadequate to afford the basic amenities,” said Parks.

Political analyst Arthur Shopola said looking at the low national minimum wage, the escalating food prices and soaring transport prices “demonstrates the absence of government in the oil industry, and how oil is actually managed in this country”.

“Maybe our government missed an opportunity during Covid to introduce in its economics the element of working from home because this was going to be helpful,” he said.

“It was a more effective time to require some sort of reconfigurations and arrangements in the labour laws, designed to regulate employment conditions.”

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“I’m talking about the occupational health and safety Act because people would be working from home, compared to now when we are facing a dire situation,” said Shopola.

Job losses

Thokozile Madonko from the southern centre for inequality studies at Wits University noted the heavy burden the petrol price would cause on small businesses as well, however, its knock-on effect might even lead to job losses.

“Small to medium enterprises are suffering already and so this would be a further knock-on effect. Even though there’s been a slight adjustment upwards to the growth projections, it’s still negligible,” Madonko said.

“We should be looking at 45% growth to meet our developmental needs and we’re nowhere near that.”

Financial pressure

The Automobile Association of South Africa (AA) said the increases were going to hit consumers hard.

“They come at a time when most South Africans are feeling extreme financial pressure. It remains concerning, however, that in the face of these increases, government remains silent on its plans, if any, on a way forward to deal more effectively with fuel price increases.”

The AA advised motorists to keep their vehicles in good mechanical condition and their tyres inflated to manufacturer’s specifications to ensure optimal fuel usage.

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“Minimising trips where possible, using air conditioners sparingly and not overloading the vehicle are other measures owners can take to decrease fuel consumption,” the association said.

“As the end of the year approaches, many people will be planning their annual vacations. Part of that planning must include budgeting properly for fuel expenses and including some extra funds to offset possible additional increases that may occur in November and December.”

– reitumetsem@citizen.co.za