SA consumers brace for July price shock
With the price of petrol expected to rise on Wednesday, economists have warned that July will see severe strain put on consumers.
Staff Writer July 1, 2014
http://businesstech.co.za/news/general/6...ice-shock/
![[Image: Debt-drowning.png]]()
With the price of petrol rising by 29 cents a litre, and diesel by 14 cents at midnight on Tuesday (1 July), economists have warned that July is expected to put a severe strain on South African consumers.
City Power also announced that it would increase its tariffs by an average of 7% from Tuesday (1 July), after the National Electricity Regulator of SA (Nersa) approved hikes.
Moreover, Metrorail announced that train tickets would increase on Tuesday with the cost of single tickets increasing by 50 cents, and return tickets by R1.
Neil Roets, CEO of debt management firm, Debt Rescue, said these increases could lead to many more South Africans falling into the debt trap.
He noted that it would also place added pressure on the reserve bank to curb inflation which is above its 3%-6% target band and could rise further in a deteriorating domestic economic environment, according to Deputy Central Bank Governor Daniel Mminele.
“We have seen a steady growth in the number of clients seeking our help by being placed under debt review. This is to some degree is the result of the general increase in the cost of living but the monthly increase in the fuel price is beginning to play a major role,” Roets said.
He pointed out that the range of increases in essential services such as electricity and rail transport coupled to the fuel increase is going to have a major impact on the disposable income of hard-pressed consumers who will face greater challenges in making ends meet.
Many will lose their middle class status and become impoverished due to the general increase in the cost of living and rising inflation. Total consumer debt tops R1.44-trillion, according to Statistics South Africa.
Dawie Roodt, an independent economist with the Efficient Group, said further that increases in the fuel price could be expected over the next several months as the Rand is expected to depreciate further and because there has been a steady rise in the price of crude oil.
“We don’t predict any relief in the foreseeable future and fuel prices will continue climbing,” Roodt said.
Roets said rising food and fuel costs and slow economic growth are making it difficult for many South Africans to pay back their loans on time. One in every four South Africans is unemployed and the number of borrowers who are three or more payments in arrears has risen to nearly 50%.
“The writing is on the wall for many middle class families who have only recently escaped from dire poverty. Many will be pushed back into poverty,” Roets said.
With the price of petrol expected to rise on Wednesday, economists have warned that July will see severe strain put on consumers.
Staff Writer July 1, 2014
http://businesstech.co.za/news/general/6...ice-shock/
![[Image: Debt-drowning.png]](http://businesstech.co.za/news/wp-content/uploads/2014/06/Debt-drowning.png)
With the price of petrol rising by 29 cents a litre, and diesel by 14 cents at midnight on Tuesday (1 July), economists have warned that July is expected to put a severe strain on South African consumers.
City Power also announced that it would increase its tariffs by an average of 7% from Tuesday (1 July), after the National Electricity Regulator of SA (Nersa) approved hikes.
Moreover, Metrorail announced that train tickets would increase on Tuesday with the cost of single tickets increasing by 50 cents, and return tickets by R1.
Neil Roets, CEO of debt management firm, Debt Rescue, said these increases could lead to many more South Africans falling into the debt trap.
He noted that it would also place added pressure on the reserve bank to curb inflation which is above its 3%-6% target band and could rise further in a deteriorating domestic economic environment, according to Deputy Central Bank Governor Daniel Mminele.
“We have seen a steady growth in the number of clients seeking our help by being placed under debt review. This is to some degree is the result of the general increase in the cost of living but the monthly increase in the fuel price is beginning to play a major role,” Roets said.
He pointed out that the range of increases in essential services such as electricity and rail transport coupled to the fuel increase is going to have a major impact on the disposable income of hard-pressed consumers who will face greater challenges in making ends meet.
Many will lose their middle class status and become impoverished due to the general increase in the cost of living and rising inflation. Total consumer debt tops R1.44-trillion, according to Statistics South Africa.
Dawie Roodt, an independent economist with the Efficient Group, said further that increases in the fuel price could be expected over the next several months as the Rand is expected to depreciate further and because there has been a steady rise in the price of crude oil.
“We don’t predict any relief in the foreseeable future and fuel prices will continue climbing,” Roodt said.
Roets said rising food and fuel costs and slow economic growth are making it difficult for many South Africans to pay back their loans on time. One in every four South Africans is unemployed and the number of borrowers who are three or more payments in arrears has risen to nearly 50%.
“The writing is on the wall for many middle class families who have only recently escaped from dire poverty. Many will be pushed back into poverty,” Roets said.