Higher fuel prices to impact households: economists

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Economists have warned that higher fuel prices will have an impact on households.

As of midnight, petrol costs R18,30 cents per litre inland, breaching R18 per litre.

According to the Department of Energy, the petrol price is up by 91 cents per litre, diesel by 58 cents a litre and illuminating paraffin by 50 cents a litre.

This is the highest fuel price increase the country has seen this year.

It said the weakening of the Rand against the US dollar and higher international oil prices had led to a higher cost of petrol.

ABSA economist Miyelani Maluleke says, “There is now a greater amount of mobility compared to last year. You think of a standard car with fuel capacity of about 45 to 50 litres you will now be paying about 200 more to get a full tank compared to what you were paying in December last year. And also, the higher cost of fuel could also affect the other things in the economy including the cost of public transport and the cost of distributing products such as food.”

Illegal electricity connections

The Abahlali baseMjondolo Movement (ABM) has raised concerns over the fuel price hikes, saying low-income households will suffer further economic hardships.

ABM’s President Sbu Zikode says the fuel price increase could result in further illegal electricity connections.

“We are very concerned as the movement that the rise in the fuel price will lead to the situation being more devastating for those living in informal settlements. This will lead to a massive shift from the use of paraffin to what we call self-connection to electricity which can result in shack fires and other devastating effects,” says Zikode.

Meanwhile, Economist Owen Nkomo says the continued increases in the prices of fuel will continue to have a devasting impact on an already strained South African economy: 

However, on the other hand, Economist Azar Jammine says the positive thing about the coronavirus lockdown regulations is that people who are working from home will be able to save money that they would have spent on the increasing fuel price.

Jammine elaborates more in the video below: