Fuel increase to put more strain on households
Ashley Rasebotsa, President of the Polokwane Chamber of Business, shared his views on what the 12% petrol price increase means and the knock-on effects it will have for poor to middle-class consumers.
POLOKWANE – The increase on Wednesday will certainly increase the financial pressure on poor to middle-class households who are already feeling the burden of the April fuel increases.
“Petrol has become an indispensable part of our day-to-day lives and we can’t imagine life without it. The petrol hikes are not happening in isolation. Generally, the whole economy is battling currently. At the moment petrol prices are sky rocketing, along with increased interest rates and the devaluation of the rand against major leading currencies like the dollar will put added pressure on consumers,” says Rasebotsa.
He says the expected petrol hike will directly or indirectly affect all major sectors like agriculture, transportation, manufacturing and retail.
“This petrol price increase affects the prices of daily essential commodities which are transported on a daily basis. Increase in the fuel price will result in an increase in these essential commodities,” Rasebotsa warns.
He goes on to say that this will have a more severe impact on poor people because these households spend more than half of their income on food and only a tenth on fuel.
He says it is custom of increases in fuel to start this chain reaction, and once it starts it will affect everyone. He says the increase in the petrol price will see a rise in transportation costs as well.
“This will result in an increase in the price of goods. This increase in the price of goods will gradually force people to tighten their belts even more, and soon this chain reaction in price increases will spread. These ups and downs will push more people into poverty and leave the poor in an even worse state,” says Rasebotsa.
According to Rasebotsa, the current economic climate forces consumers to make major lifestyle changes in order to cope. “For example, while travelling to work people should make use of lift clubs to save on petrol costs. Furthermore, avoid taking up unnecessary credit as interest rates are on the increase. Aim to pay off current debt quickly so that you have excess funds for emergencies,” he advises.
He says business will also be affected as consumers will only buy necessities to get them through this difficult economic time.
“One of the lifestyle changes the communities have to adopt is the concept of ‘permaculture’. Individual households can, for example, start their own vegetable gardens to grow for their own consumption which can save a few rands in the long run,” says Rasebotsa.
He says his view is that businesses and consumers need to tighten their belts just to get through this difficult period and will have to adapt to survive within this tough economic conditions.
