South African consumers will face yet another blow with the expected increase in fuel price of around 60 cents a litre in September.
According to the latest National Credit Regulator results, South Africa's total consumer debt weighs a hefty R1.71 trillion. South Africa is also considered to be one of the most indebted countries in the world, according to the World Bank. The country is drowning in debt and the near fuel price increase will only add to consumer's plight.
The expected fuel increase is attributed to a combination of rising crude oil prices and a debilitating currency, says Efficient Group economist, Dawie Roodt. The petrol price is expected to increase by 59 cents a litre whereas diesel will be selling for around 56 cents a litre more.
In addition, indications point to the reality that the rand will continue to erode, says CEO of debt counselling company Debt Rescue, Neil Roets. This will effect a further increase in the fuel price as well as the cost of all imported goods.
“Food inflation is outstripping general inflation running at about 6.9%. Despite the bumper maize harvest, prices of all grains are actually expected to rise in the short-term because the new harvest prices will only feed through into the economy by next year".
“This fuel price increase is going to hit consumers like a ton of bricks. If current trends continue we could see more of the same in October", said Roets. South Africa currently has a tally of 24.68 million credit-active consumers ( 24.31m in the previous quarter) who have collectively scored up 9.69 million impaired records.
In laymen's terms, these consumers are three months or more in arrears with at least one of their accounts.
Furthermore, Roets notes that there had been a significant increase in the number of consumers who sought relief since January by going under debt review.
“We have seen an increase of over 20% over the past several months of the number of debtors approaching debt counsellors for help.” Roets advises that consumers who have not yet drawn up a budget, do so now without delay.
“Get rid of credit cards and store cards which carry very high-interest rates and try and avoid borrowing money as unsecured loans that also carry extortionately high interest rates", concludes Roets.
- Absa introduces WhatsApp Banking - A first for SA
- Siemens Gamesa to install two large onshore wind farm projects in South Africa
- Advancing South Africa into the 4th Industrial Revolution
- 5 things McKinsey is doing to try salvage its reputation in South Africa
- Virgin Active's growth is 'pumping' in SA and the UK