You will have less money in your pocket from this winter

SOUTH Africans must brace for an economic winter that is going to last well into the summer months and even beyond.

This week the AA estimated that the petrol price could rise by about R2 a litre in June. Diesel is likely to go up by around R1.60 a litre and illuminating paraffin by over R2. But that’s not where the pain ends.

During April and May, the government gave motorists some relief by reducing the General Fuel Levy by R1.50. This is a tax paid on every litre of fuel that is bought. At this stage it is not clear whether there is any further relief in the pipeline but, as things stand, motorists will have to fork out the additional R1.50 over and above the expected June increase.

That’s a total increase of just under R3.50 a litre for petrol, taking the total price to about R25 a litre. Filling up a car with a 50-litre tank will cost about R1 275.

Our fuel price depends on two main factors – the rand-dollar exchange rate and the international price of oil. Right now, neither is working in our favour. As a result, the cost of transporting goods and people is likely to continue rising in the foreseeable future. And that’s not all that is going up.

This week the Reserve Bank is likely to once again increase interest rates. This means repayments on any borrowed money get a little more expensive.

Municipalities also want more money from us and plan to up what we pay for rates as well as utilities like water and electricity.

Absa, one of South Africa’s biggest banks, recently noted: “The data, although still very limited, could suggest that economic pressure on consumers is mounting. Further pressure in terms of the fuel price hikes and the cost pressure building in the supply chains as a result certainly paints a bleak picture of consumer health and economic outlook for South Africa.”

Put simply, everyone is going to have less money in their pockets. For those who are already struggling to make ends meet, the situation will get dire.

While the government must be aware of the impending economic storm, it seems incapable of doing anything to mitigate the risks. Instead, it continues to spend like it is business as usual. So, while the economic storm clouds gather, our leaders are considering spending R22 million to build a monumental flag and to give Cuba a R50m donation.

Initially we were told the donation was in cash. But after AfriForum, the civil rights organisation, went to court and stopped the payout, the government decided to provide R50m in food aid.

It has now emerged that R50m was an initial payment. Our government has in fact pledged R350m. Yet unemployed South Africans eke out a living on R350 a month.

Meanwhile, this week in Colombo, the capital of Sri Lanka, a new prime minister was being sworn in.

Ranil Wickremesinghe took over after Mahinda Rajapaksa stepped down because the country is in the grip of an economic crisis. Food, fuel and medicine are in short supply resulting in widespread protests.

Wickremesinghe warned that the financial crisis would get worse and “the next couple of months will be the most difficult ones in our lives”. His words may ring as true in South Africa as they do in Sri Lanka.