Understanding petrol increase

02/10/2018 00:00:00

Three ways the petrol price impacts your life

Petrol prices are at record levels in South Africa and while our Minister of Energy, Jeff Radebe, investigates ways to control the costs, consumers are forced to adapt – an extremely difficult task for lower-income consumers. The Rand/Dollar exchange rate has an impact on petrol prices and when the Rand doesn’t perform well, the impact is negative. But fuel price make-up is more complex than that. The price of crude oil and petroleum products also plays a role, and both have been higher this year.

However, it’s not just the month-on-month increases that are alarming. When you compare the petrol price in 2008 to the petrol price today, it has more than doubled. According to a Business Insider article, petrol was R6.92 in July 2008 and in July 2018 it was R15.53.

The additional fuel levy has added to the consumer’s burden, with a 165.35% increase on the levy over the past decade.

We all know the drill – the fuel price increase is announced, and cars are queuing around the block at petrol stations. But other than paying more for fuel, how else does such an increase affect you?

This is how a high petrol price impacts day-to-day life:

  • Public transport costs

South Africa’s taxi industry feels the pinch every time we have a petrol increase, and it’s not long before that pressure is passed onto consumers, with increased fares for both long distant and local travel.

  • Small businesses take strain

A basic side-effect of a petrol increase is that people have less money to spend on small luxuries. The smaller the business, the harder it is to absorb the impact of lower consumer spending. In addition, supplier costs become higher as they are also dealing with increased costs, especially when it comes to transport.

  • Food prices are impacted

From September 2017 to June 2018 the average food basket price for low income households has increased by 7%. Increased petrol prices means it becomes more expensive to move produce and other foods across the country, and that cost is eventually passed onto the consumer.

How to cope

When the economy is weak, it’s important not to take on additional debt. Rather try lower your monthly expenses. One way to do this is with a consolidation loan. By pooling your various loan accounts into one account, you could lower your monthly installment.

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About African Bank

Our mission is to be a successful Retail Bank offering a wide range of products and services to the consumers of South Africa. The people who work for African Bank represent the diverse population of South Africa; therefore we are a reflection of you, of all South Africans. We seek to provide value - more than our consumers expect of us. We promise to live our purpose 'humanity through banking' in all that we do and we are confident that we can, because 'We are You'.