Just when we thought we were past the Janu-worry blues, the latter half of Febru-worry emerged from the shadows and whacked us with price hikes across the board.
The petrol price increased to a whopping R21.60/L inland and R20.88/L in coastal areas on Wednesday. This is the first time the price of petrol shot past the R20 mark (it hit R20 for the first time last year). The recent increase was slightly cushioned by the rand’s stronger performance over the past couple of months, but as the conflict between Russia and Ukraine escalates, we’re likely to see more increases. 😱
We’ve previously explained that fuel prices are determined by three factors:
1. Fuel import costs,
2. Government’s regulation of the costs and profits for wholesale retailers (the guys who supply petrol stations) and the services that transport fuel,
3. Tax and levies that go towards the Road Accident Fund.
Finance minister Enoch Godongwana thankfully did not increase the fuel levy referred to in point 3 during his recent budget speech; it’s at R6.11/L. But government also has very little space to manoeuvre because it used up the internal buffer called the “slate levy” that it usually relies on to protect us from petrol increases. The South African National Taxi Council said it may look at increasing taxi fares after avoiding doing so for some time.
The price of fuel also increased in some parts of Europe and Britain this week.
Bad news here too, according to the latest Household Affordability Index. The index looks at the cost of an average household food basket, made up of 44 core food items most frequently bought by the lower-income households that make up most of SA.
It found that the cost of this basket increased to R4 355.70 in February 2022 from R4 001.17 at the same time last year. Only five items – rice, potatoes, curry powder, stock cubes and green pepper – became cheaper, and maize meal stayed the same. Again, the ongoing Russia-Ukraine conflict comes into play: according to agri-economist, Wandile Sihlobo, the price of some commodities, especially wheat, is set to rise.
Last week, the National Energy Regulator of SA (Nersa) approved a 9.1% increase in electricity prices, which will come into effect on 1 April (how appropriate for South Africans, who feel we’re being taken for fools). Thankfully this is nearly half the 20.5% increase Eskom controversially applied for in January! The utility isn’t thrilled about not getting more, while opposition parties say 9.1% is still too high – and it’s above inflation.
There’s no sugarcoating here: It’s going to be tough. Expect your budget to increase, keep your existing costs down and don’t take on any more expenses.
This article appeared as part of The Wrap, 4 March 2022. Sign up to receive our weekly updates.