Petrol price increase puts further strain on South Africans

While some reprieve will be felt by diesel users for the month of May, petrol users on the other hand will be forced to fork out 37 cents per litre more. Picture: Antoine de Ras (ANA)

While some reprieve will be felt by diesel users for the month of May, petrol users on the other hand will be forced to fork out 37 cents per litre more. Picture: Antoine de Ras (ANA)

Published May 7, 2023


South African consumers had to scramble, once again, to readjust their monthly budgets after the price of petrol was increased this past week.

While some reprieve will be felt by diesel users for the month of May, petrol users, on the other hand, will be forced to fork out 37 cents per litre more.

Petrol prices have jumped from R22.64 a litre for 93 octane petrol and R22.97 for 95 octane petrol in April to R23.01 and R23.34 a litre, respectively.

This is added stress for consumers who had to contend with not just fuel prices in recent times but also interest rates increasing, food inflation pushing the prices of basic items up, and also rolling blackouts as the ailing state power utility Eskom battles to provide energy to the country.

Analysts have said that while the price drop for diesel will be welcomed, the steep increase in petrol prices will hit consumers hard.

Andra Nel, marketing manager brand & purpose at KFC, said: “As South Africa has come to terms with the fuel increase, we know that a lot of households have already started making adjustments on their spending behaviour in terms of how they make sure that they are still meeting their obligations.”

“But what we also know is that fuel is an input cost for the transportation of consumer goods, and with food insecurity being a very vast consequence of this, we will likely see an increase in malnutrition amongst especially low income communities. And we know that our most vulnerable group, our children, are worse affected by this. Fuel price hikes really do affect all elements of the consumer value chain, and as we continue on this journey, we need to understand that nearly 3 million children in South Africa are not sure where the next meal is going to come from. So, this will worsen the situation for them,” Nel told Business Report.

“From an Add Hope perspective, what we're doing is we're continuously partnering with our consumers to make sure that we raise as much funding as we possibly can so that we lean into areas where the need is greatest and that we remain agile in terms of identifying where the need is and making sure that we continue to make an impact and help those that need it most - our children,” she further said.

Hayley Parry, a money coach and facilitator at 1Life's Truth About Money, said the fuel price adjustment was a mixed bag for consumers.

“If you are going to fill up your car, you will find that if you are filling up with diesel, the price of filling up your car will have decreased. However, if you are filling up with petrol, unfortunately, the petrol price has been hiked by 37 cents per litre, taking the price of petrol to over R23 per litre,” Parry said.

“This is obviously going to have a further knock on consumer finance because, at the moment, it feels like we are being squeezed in every direction. As the cost-of-living increases, these fuel price increases are going to further contribute to that. Off the back of the interest rate hikes, this really is a trying time for consumers as they are getting squeezed in all directions, and it is definitely impacting discretionary spending, as well as abilities to repay loans of all sorts, and I think the number one take away here is that we need to be on top of our money management. Managing the money that we do have better is key to surviving this current cost of living crisis, and number one would be getting yourself a financial education,” she further told Business Report.

“Managing your money is a DIY job from the moment you start working until the day you die, so this is a good time, even if it feels like it is a stressful time, to get on top of this, figure out how you are going to manage the money do you have better because doing so will helpfully ease some of the stress and strain you may be feeling right now,” she further advised.

Diesel price decrease cheered

Gavin Kelly, the CEO of the Road Freight Association, said the diesel price decrease was welcome news.

“Every time there is a decrease in the price of fuel, one of the largest aspects of the operational cost of a freight company, which is the cost per kilometre to transport goods, reduces.”

Kelly added that this had a positive impact on the revenue streams for operations – allowing a better margin.

“This will translate into lower retail transport and storage costs and will benefit the consumer.”

South African Farmers Development Association executive chairperson Dr Siyabonga Madlala said any decrease in the diesel price was welcomed.

Madlala added that farmers had been facing other input costs.

“The farmers face many challenges with the rising cost of fertiliser, shipping costs and load shedding. As much as we appreciate the decrease of diesel, we also need to look at across-the-board decreases as farmers are crucial to the economy of South Africa.”

More pain to come

According to FNB, fuel prices look gloomy for the remainder of the year.

Jalpa Bhoolia, an investment analyst, and Koketso Mano, a senior economist at FNB Wealth and Investments, said: “We project the trend in petrol prices to worsen over the remainder of the year, even though prices should remain below post-lockdown highs and the volatility in international markets should keep the outlook fluid.”