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By unknown | Jul 01, 2008 | COMMENTS [ 0 ]

Penwell Dlamini and Sibongile Mashaba

Penwell Dlamini and Sibongile Mashaba

South African has entered a phase of spiralling inflation, caused by rocketing energy prices that are forcing up the cost of transport and practically everything on shop shelves.

Petrol prices increase at midnight by between 75 cents and 81 cents a litre.

The minerals and energy department says unleaded 91 octane goes up by 71 cents a litre, 93 octane by 79c, and 95 octane by 81c.

The wholesale price of diesel goes up by 68,4 cents a litre and the retail price of illuminating paraffin goes up 73 cents.

Fuel prices have already risen five times this year, and economists expect more increases before the year is over.

The global price of oil is sky-rocketing this year and South Africa can do little to control this imported inflation.

"If things remain as they are globally and the exchange rate of the rand continues to drop, we can expect another increase at the beginning of August," said Absa economist Jeff Gable.

And Eskom is adding to the anguish.

The national electricity utility is bumping up its prices by another 13,3percent today after collecting a 14,2 percent increase in December.

But things could have been worse. The utility asked the National Energy Regulator for a 53percent hike.

AS SA's economy runs on fuel and electricity, these additional basic costs for production will soon start filtering through to consumers in higher prices for transport and just about all commodities.

Metrobus in Johannesburg is raising fares by 40 percent today, as commuters complain that the company has cancelled free transfers between buses.

"I cannot imagine how much suffering the bus fare increase is going to cause me. I now have to pay more than R80 for the coupon," said Edith Ramasopane, who commutes from her home in Hillbrow to work at the Southgate Mall in the south of the city.

Taxi associations across the country raised fares on urban routes in March by between 50 cents and R2. There is going to be another increase within three months.

"It is hard for us to raise our fares immediately because we understand our customers are not earning much," said Peter Mabe, secretary of the Dobsonville, Roodepoort, Leratong and Johannesburg Taxi Association.

Automobile Association spokesman Gary Ronald said that consumers must now spend more on transport, which means they will have less to spend on food and other needs.

"One solution would be for people to join lift clubs. Municipalities should also make minibus transport more accessible and efficient in the suburbs," said Ronald.

AgriSA spokesman Johan Pienaar said that higher fuel prices would lead to an increase in the price of food.

"Farmers are incurring high production costs because fuel is used for tractors and trucks and the chemicals used for fertilisers."

Pienaar said some cash-strapped farmers would be forced to cut production, which would also bump up the price of food.

"Every one cent increase in the price of diesel adds R10million to production costs in the agricultural sector a year," he said

National Consumer Forum chairman Thami Bolani said it was becoming more unmanageable for "people to travel".

Bolani said the government must reduce the tax it collects for petrol and educate people on ways to save fuel.

"The fuel price hike means an increase in inflation, which will cause the Reserve Bank to increase interest rates," Absa's Gable said.

The poor have lost control of their lives, the labour federation Cosatu said yesterday.

"Increases in interest rates, electricity, food and fuel prices mean an erosion in the living conditions of the poor," said Patrick Craven.

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