Petrol Price to Drop But Outlook Still Grim

The Last Petrol Price Drop for a While

Consumers can look forward to a 69c/litre drop in the petrol price and a 50c/litre fall in the diesel price on Wednesday morning (3rd September, 2015).

Although we should be grateful for any economic relief whatsoever right now, no matter how short-lived or slight, this petrol price decrease does little to improve our current circumstances or the bleak outlook South African consumers’ face.

Economists say that, if it weren’t for the Rand falling to an all-time low of R14 against the US dollar last week, consumers would’ve enjoyed as much as a R1.00 decline in fuel prices this week.

Secondly, the Rand is expected to remain at risk, as crude oil prices continue to rise. In turn, this means we probably won’t be seeing any subsequent reductions in the petrol price for a while.

Consumer Debt, Sluggish Growth and Drought 

Other causes for alarm include escalating consumer debt and the GDP (Gross Domestic Product) contracting by 1.3% last week, as a result of the weakening Chinese economy. GDP can be defined as an all-inclusive measure of the goods and services a country produces.

In addition, food prices may very well rise, owing to drought in SA’s major farming regions. As the endless list of reasons to get debt free and start saving, before it’s too late, grows ever longer.

No Strategy Despite Imminent Crisis

Moreover, a gold and platinum sector strike looms close, while the manufacturing sector has formally entered a recession.

Despite the Rand clawing back up to R13.3097 against the dollar on Friday, drooping commodity prices persist, dampening any prospect of our economy making a comeback.

Analysts believe Eskom’s power cuts and President Jacob Zuma’s misgovernment of our country are the biggest culprits behind this imminent economic crisis.

Worst of all, the government doesn’t appear to have any strategy in place to combat any of these serious concerns.

Will Sarb Hike Interest Rates?

As September’s monetary policy meeting draws near, the SA Reserve Bank’s (Sarb) decision becomes harder and harder. Sarb has to consider not only the volatility of the currency, but also the impact that a repo rate hike may have on our bruised economy at this stage.

Moreover, higher interest rates will undoubtedly result in consumers getting even stricter about cutting back on spending, in order to maintain even the most basic standard of living.

Consumers Must Settle Debts and Save

Investors will be frightened off by low consumer confidence, sensing deep-rooted decay in our structure, inescapably resulting in a devastating currency crisis.

Now, more than ever, consumers should be hunkering down and battening the hatches, in preparation for a perfect economic storm. One simply cannot afford to be in debt in such troubled economic times. So, get into survival mode, pay off your debts and then begin to save for the unthinkable – soon to become a harsh reality.


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