Dawie Roodt, Chief Economist at the Efficient Group, has warned that a combination of petrol price hikes, more taxes, and a ratings downgrade for South Africa could cripple consumers.
Roodt said that a big fuel price increase in combination with government levies that come into effect in April could see petrol going up by R1.20 per litre.
He added that the base price of diesel could also rise by 70 cents per litre.
Debt Rescue CEO Neil Roets said the timing of the hikes, on the back of extensive load-shedding, is poor and he is seeing “daily records being set by the number of distressed consumers who are knocking on our doors to be placed under debt review”.
Roets said that the pressure on fuel prices – such as the fuel levy rising by over 22% in the last three years – will spike later this year when the country’s carbon tax kicks in.
The weakness of the rand against the US dollar is further compounding the fuel price problem, he added.
“With the ANC’s land expropriation policy very much on track… there is little chance of the rand strengthening or of more substantial foreign direct investment coming into the country.”
Additionally, ratings agency Moody’s will soon decide if it will declare South Africa’s bond notes as “junk” – making it more expensive for the country to borrow money. He added that according to reports, the state is borrowing R1.2 billion per day.
Even more bad news for consumers is the recent price hike announcement from Eskom, which will see electricity prices going up over the next three years, he concluded.