The elections are over.
Some will celebrate their victories, and others will tjank over their losses, but for ordinary folk, life goes on. And life continues to become increasingly more expensive.
This month will see catastrophic increases in fuel and energy prices. See below:
- Petrol 95: increasing by R1.21 per litre;
- Petrol 93: increasing by 96 cents per litre;
- Diesel 0.05%: increasing by R1.48 per litre;
- Diesel 0.005%: increasing by R1.42 per litre;
- Illuminating Paraffin: increasing by R1.42 per litre.
Most South Africans are already struggling to make ends meet, and these huge fuel price hikes will see consumers having to use their already limited disposable income to keep their heads above water.
It is very likely that we will see petrol cost R20/litre before year end, and it will have a huge impact on all of us.
Significant price increases like these push up the price of all other commodities, as the cost to produce and transport raw materials is increased.
This is then reflected in everyday necessities like bread, milk, maize and virtually anything and everything on store shelves.
From seed to plate, we will see rising costs.
The most financially vulnerable often live far away from city centres and work hubs. This makes transport costs a huge part of their budgeted expenses.
A fuel price increase will most likely lead to an increase in the price of public transport costs, something which struggling consumers can ill afford right now
South Africa is currently experiencing its highest unemployment rate, with millions dependent on social grants.
Massive fuel hikes like this will undoubtedly plunge more people into poverty.
With a R1.42 increase in illuminating paraffin, the most vulnerable who use it for lighting, heating and cooking will be especially hard hit.
Those who do have an income and who are credit active have been affected by the pandemic and subsequent lockdowns.
At the end of Quarter 2 of 2021, the average arrears debt per consumer was nearly R16000.
The current debt overall stood at R2.077 trillion, with over R1 trillion of that allocated to unsecured debt.
If consumers have borrowed to the point where they are using bank-issued credit cards and personal loans with interest rates of up to 25% to pay for food and electricity – and are already in arrears with their accounts – chances are that they won’t qualify for more debt.
Especially since the NCA prohibits credible lenders from lending money to consumers who cannot afford it.
Trapped in a vicious cycle of debt, consumers will in all likelihood turn to rogue micro lenders and community mashonisas, where they will pay up to 100% interest on loans made.
Inevitably, banks are going to start hiking interest rates, and this is never good for consumers.
Everyone needs a little self-love and spoiling sometimes. With Black Friday around the corner, many are already planning to splurge on sale items.
Yet, as we struggle to afford the basics, we must ask ourselves if we truly need the luxuries we are planning to buy. Even if they are on sale.
In order for the economy to grow, we need to spend.
In order for local, small businesses to succeed, we need to support them. But with the rising costs of basic necessities, we have to watch our spending.
As boring as it might sound, now is the perfect time to relook your budget. And as you do that, remember the following:
1. You need to be honest with yourself about your wants and your needs. Food is a need. Take–aways thrice a week isn’t.
2. Clothing is a need. But buying luxury name-brands before buying school uniforms isn’t.
3. Your debt can’t be flicked away by some magic wand. To avoid intimidating and embarrassing calls from debt collectors, find a way to pay your debt – and then stay out of debt!
4. Write your income and your expenses down on paper. Don’t keep it in your head. You can’t keep track of your money like that.
5. Cut down on unnecessary spending. There is no shame in saying you can no longer afford something.
6. Stick to your budget as best you can. Not doing so will see you run short and scrambling for money before your next payday.
Every day living costs are rising, but our incomes aren’t. We must learn to live within our means.