Motorists can breathe a sigh of relief following the announcement earlier this week by the Department of Mineral Resources and Energy (DMRE) of a substantial drop in the price of both petrol and diesel from Wednesday, 4 January.
The department also confirmed a slate levy decrease of 21.9 cents per litre which will be implemented for petrol and diesel, from 4 January onwards.
The official figures published by the DMRE show that both the retail prices of 93 and 95 unleaded petrol will decline by R2.06 per litre from Wednesday, 4 January 2023, and wholesale diesel prices will see an even more significant decline, with 50ppm reducing by around R2.81 and 500ppm by about R2.69.
That means a litre of 95 unleaded petrol will cost R21.40 inland and R20.75 on the coast.
The DMRE said the main reasons for the fuel price adjustment were an average Brent Crude oil price decrease from $88.77 per barrel to $85.08 per barrel during the period under review. Oil prices also continue to drop, in response to fears of a global economic recession.
However, for millions of South Africans who are battling to put enough food on the table, the hope of a corresponding drop in the price of basic foodstuffs is set to be dashed.
According to the latest food inflation brief from the Bureau for Food and Agricultural Policy (BFAP) food prices in South Africa remain at elevated levels and consumers should expect higher prices going into 2023.
“We expect that food inflation could peak in the first quarter of 2023, after which the higher base effects apparent from March 2022 will result in smaller inflationary effects during the rest of 2023,” it said.
CEO of Debt Rescue Neil Roets, says that although any financial relief is good news for South African consumers, it is small comfort to the millions of families who are heading into 2023 in a far worse position financially than in 2022.
“Food prices remain at distressing levels for the average consumer, and the prices, especially of staple foods, continue to rise, regardless of decreases in inflation, petrol or diesel prices – with authorities either unable or unwilling to elucidate this continuing trend.”
“With each petrol price increase in 2022 we have seen the second round inflationary pressures add up and hit consumers with a cost of transport increase, in addition to the increase that is passed on from retailers who need to transport food to their stores – yet, previous drops in fuel prices during 2022 did not see a subsequent drop in food prices. In fact, food price inflation went in the opposite direction,” he points out. “With 81% of South African households now fighting a daily battle to put enough food on the table, what respite can authorities offer, to give people some hope for the future?”
The BFAP says that food inflation would likely remain high over the next three months as the full effects of persistently increasing commodity prices and weaker exchange rates filter through to retail markets.”
It said that the two variables that should be monitored to gauge inflation rates during 2023 are global maize prices and the ZAR/USD exchange rate.
“South Africans have tightened their belts down to the last notch, and now there is nowhere to go,” warns Roets.
“This is especially concerning in light of other factors like the interest rates which have been on an upward trend and will likely remain high for the foreseeable future, while the Reserve Bank keeps a close eye on inflation. The effects of rate hikes are only felt after six or nine months, and so consumers cannot expect any respite here either.”
Roets says that the aftermath of the festive season spending trend will almost certainly lead to South Africans leaning even more heavily on their credit and store cards to get through January.
“In fact, we foresee that people will be in more trouble this year, than ever before,” he predicts.
“My advice to those who fall into this trap is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” concludes Roets.
BUSINESS REPORT