Expected petrol hike spells disaster

daveza

daveza

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http://www.fin24.com/Economy/Expected-petrol-hike-spells-disaster-20140220

Cape Town - The projected increase in the petrol price of around 30 cents a litre is going to peg the fuel price at an all-time high of about R14.20 to the litre.

This is going to add to the woes of deeply indebted consumers, warned Neil Roets, CEO of Debt Rescue on Thursday.

The steep increase in petrol and food prices were the main reasons for the surprise spurt in the January Consumer Price Index (CPI) of 5.8% from 5.4% in December. Economists expected a rise in CPI to 5.7%.

Merina Willemse, an economist with the Efficient Group, told Fin24 this spells more interest rate hikes later on this year.

"For now we are forecasting another 100 basis points increase in interest rates for 2014," she said.

Roets said the projected major increase in the petrol price in March could lead to many more South Africans falling into the debt trap.

The petrol price increased by 38c and 39c a litre respectively in January and February this year.

He said substantial numbers of consumers could be facing impaired credit records by being blacklisted.

"We have seen a substantial increase in the number of clients knocking on our doors, seeking relief by being placed under debt review.

"This is to some degree 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."

Predictions

Economist Dawie Roodt of the Efficient Group said if the rand does not deteriorate further, the petrol price for all grades would increase by between 30c and 33c a litre, while diesel would increase by between 25c and 26c a litre, taking both to historic highs.

Gina Schoeman, an economist with Citi Research, a division of Citigroup Global Markets, expects more upside for inflation this year.

"This would be due to upside pressure building in petrol - 39c/litre in February and a likely 26c/litre in March - and food and rand pass-through," she said.

"By the first quarter of 2015 we believe that the 150bps in rate hikes that we are factoring in - 50bps in January, March and July, respectively - will be enough to push CPI back into the target range."

Roets said according to the National Credit Regulator there are 9.76 million consumers with impaired records in SA.

That means they have accounts not paid for three months or more. Total consumer debt is now topping R1.44-trn, according to StatsSA.

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 with impaired credit records has risen to nearly 50%.
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Scary stuff.
 
I read articles like this and worry for the country. 9.76 million consumers with impaired records in SA? That's stupidly high, and I'll bet the majority are there because they were living well beyond their means. *******s, ruining things for the rest of us.
 
A realistic evaluation to keep in mind is that this is the government's doing. They are doing this because they want to squash the middle class down, i.e. make them poor.
 
We can already see the effect of the fuel price on our bus.

We have 4 running from Strand/Somerset West to Cape Town each day (100km round trip) with a combined capacity of 300 seated passengers. Last year the service ran at about 250 passengers a day. We are now at 350+ per day.

I've also noticed that for the first time in 3 years there has been a decrease in the number of cars on the road coming into town. I expect with each price increase we will see more and more people leave their cars at home.
 
cbrunsdonza said:
We can already see the effect of the fuel price on our bus.

We have 4 running from Strand/Somerset West to Cape Town each day (100km round trip) with a combined capacity of 300 seated passengers. Last year the service ran at about 250 passengers a day. We are now at 350+ per day.

I've also noticed that for the first time in 3 years there has been a decrease in the number of cars on the road coming into town. I expect with each price increase we will see more and more people leave their cars at home.
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If I could reliably get to work on public transport I would....
 
I've also noticed that for the first time in 3 years there has been a decrease in the number of cars on the road coming into town. I expect with each price increase we will see more and more people leave their cars at home.
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Or could be an indication of how many have had their cars reposessed - or don't have a job to go to anymore.
 
This is one of the reasons I had to buy a bike. I just cannot keep on driving in my car, getting stuck in traffic for 1h30 everyday. Using R500 a week on a 30km round trip. It just does not make sense. So now I am on 2 wheels, yes I might be more exposed to danger, but it works for me and I spend the same amount of money in a month on fuel than what I would have used in a week and have no traffic at all.
 
Type RSA said:
This is one of the reasons I had to buy a bike. I just cannot keep on driving in my car, getting stuck in traffic for 1h30 everyday. Using R500 a week on a 30km round trip. It just does not make sense. So now I am on 2 wheels, yes I might be more exposed to danger, but it works for me and I spend the same amount of money in a month on fuel than what I would have used in a week and have no traffic at all.
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I have considered it but with the way some bikers have behaved they have made motorists hate them, so I am scared for my personal safety.
 
In all fairness it doesn't cripple the middle and upper classes too much. As a middle class person, I just find ways to cope, cutting on luxuries , and that sucks. I still drive my own car alone mostly and so does 99% of the people I know. Government knows this and tolerates the noise the middle class kicks up.

The people it does hurt are those who are in the lower income groups. The attitude the Government has with the middle+ class is simply crippling these groups of people whilst they are desperately trying to make ends meet.
Type RSA said:
This is one of the reasons I had to buy a bike. I just cannot keep on driving in my car, getting stuck in traffic for 1h30 everyday. Using R500 a week on a 30km round trip. It just does not make sense. So now I am on 2 wheels, yes I might be more exposed to danger, but it works for me and I spend the same amount of money in a month on fuel than what I would have used in a week and have no traffic at all.
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I am also contemplating getting a commuting bike. The helmet just messes up my hair.
 
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lcbxx said:
In all fairness it doesn't cripple the middle and upper classes too much. As a middle class person, I just find ways to cope, cutting on luxuries , and that sucks. I still drive my own car alone mostly and so does 99% of the people I know. Government knows this and tolerates the noise the middle class kicks up.

The people it does hurt are those who are in the lower income groups. The attitude the Government has with the middle+ class is simply crippling these groups of people whilst they are desperately trying to make ends meet.

I am also contemplating getting a commuting bike. The helmet just messes up my hair.
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Definition of middle class is between R5000 to R10 000 depending on the research paper you look at. Pretty sure most individuals on this forum are earning more than R10k.
 
Koosi said:
A realistic evaluation to keep in mind is that this is the government's doing. They are doing this because they want to squash the middle class down, i.e. make them poor.
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Why would they want to do that? It narrows their tax base.
 
Randhir said:
Why would they want to do that? It narrows their tax base.
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In a rational government, yes. In an ANC government, they will probably just print more money for themselves to spend. Also look at Zim. They are worse off than us in every way possible economically but the president can still spend money on lots of luxuries.
 
Randhir said:
Why would they want to do that? It narrows their tax base.
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You tell me... Eventually the point will be reached where people cannot get to work anymore, what then?
I do not agree they are trying to kill the poor, most of those are their voter base, do you really think they're going to mess with them too much? Not a chance! They know they all ride the taxi, so it really doesn't affect them too much.
 
TehStranger said:
I read articles like this and worry for the country. 9.76 million consumers with impaired records in SA? That's stupidly high, and I'll bet the majority are there because they were living well beyond their means. *******s, ruining things for the rest of us.
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I'm sure there are alot of people that do splurge money at any and all occassions, but there's also a significant amount that do not necessarily live beyond their means.

When I applied for my home loan, I made sure that I had more than enough money to cover all of my debt, an emergency fund, decent lifestyle and lastly, enough to save/invest. But every few months I notice that I am "getting out" less - less money to push into the emergency fund, less money to spend on luxuries/hobbies, less money to save/invest. Cost of living increases and people are being pushed to the point where they have to choose between surviving and paying debt.

Inflation, she is a real biesh.

You can argue that they have to change their situation - cut all unnecessary expenses, work smarter with your money or get a higher paying job - but even these may be difficult for some. If you're already living on the limit, what do you do?

Some people take up loans just to survive - to put food on the table or pay for whatever emergency - and then cannot repay. Or perhaps they never had the intention of repaying (you'll be surprised that there are people that take on credit and have no incline of repaying that debt).

But like you said, you do get people that will unneccesarily take on credit and live above their means. Whether pride or ignorance, either will cause endless problems down the road.
 
Inflation is driven by the government.. its their poor decisions, and utter brain-fartedness that causes it to be so high.
 
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