R30 petrol forces families to rethink every rand

For 32-year-old banker Augustine Khoza, the petrol price shock has delivered a painful ultimatum: park his 2015 Volkswagen Polo TSI, abandon some of his kasi pleasures, or watch his earnings disappear into the fuel tank.

The father of a two-year-old daughter, who lives in Saselani, Mpumalanga, has survived numerous fuel price increases. But Khoza, says this one has left him questioning some of his lifestyle choices and whether to abandon his beloved car for cheaper transport options.

Khoza’s work commute is a 34km round trip from Saselani to Thulamahashe, six days a week. On weekends, he loves going out with friends, driving around and visiting loved ones, and just enjoying life.

“People are going to be telling you, ‘Budget, budget …’ I have a car. It has a tracking device, and it has insurance. Petrol. I have a child. You must eat at home; you must eat at work. You must be well-dressed to show you are working … Everyone is affected one way or another …”

Khoza says he avoided the last-minute rush to fill up on Tuesday, blissfully unaware of the surprise awaiting him at the pumps the next morning. A casual stop that previously cost him about R300 set him back nearly R500 for 15 litres.

The latest increase has seen the price of petrol breach the R30 mark for the very first time. Consumers are now paying R3.12 more for a litre of 93 octane and R3.33 more for a litre of 95 octane petrol. The price of diesel rose by between R2.84 and R3.24 per litre, adding to transport operators’ costs.

Khoza admits that the latest financial setback has been months in the making. He says he started tracking his fuel consumption in February, only to discover that his spend had increased to a staggering R5,000.

The silver lining for Khoza is that he does not pay rent. He lives with his siblings at their family home.

“My sisters and I share household expenses. Imagine how much worse things would be if I also had rent to pay.”

As a father of a toddler with growing needs, he is reconsidering his financial priorities.

University of South Africa economist Eliphas Ndou explained that the direct result of higher fuel costs and higher inflation is a sharp erosion of households’ purchasing power.

“The decline in households’ real disposable income means families can buy fewer goods and services with the same income,” Ndou said.

As transport, food and debt-servicing costs consume a greater share of monthly incomes, consumers like Khoza are increasingly prioritising essentials while cutting back elsewhere.

Ndou said many are expected to switch from premium brands to lower-cost store brands, seek out discounts and special offers, and postpone purchases ranging from household appliances to vehicles.

Lower- and middle-income households are likely to feel the greatest pain because they spend a larger share of their income on necessities such as food, transport and housing.

For some families, the consequences could extend beyond the supermarket till. Consumers may delay replacing old cars, scale back restaurant visits, entertainment and holidays, cancel subscriptions, and even reconsider medical aid cover, Ndou said.

Although the fuel price pinch has been gradual, a simple calculation shows that from February, the inland price of 95 unleaded petrol has jumped from R20.10 a litre to R30.25 a litre in October, an increase of more than 50%.

Diesel prices, which have a direct impact on the cost of transporting goods, have risen even more sharply. The wholesale price of 500ppm diesel climbed from R17.92 a litre in February to R31.95 a litre in October.

The pinch of higher transport costs is likely to affect those who use taxis and other public transport. Hence, the Department of Transport plans to extend public transport subsidies to selected taxi routes amid the squeeze.

Its plans also include cheaper vehicles for taxi operators, more passenger trains and an overhaul of transport grants.

Although the details of these plans are still scant, department spokesperson Collen Msibi outlined some measures after Sunday World asked what the government could do to cushion households.

For one, a “unified support model” that would support “bus and taxi operators alike” on selected routes has been supported. The new system will be set up to promote “integration, sustainability, fairness, safety and commuter affordability”.

“Consultation continues with all affected parties to develop a workable model,” the department said.

But Msibi announced no implementation date, subsidy amount or projected savings for taxi passengers. He also offered no estimate of how October’s fuel increases would affect bus and taxi fares.

The government is also banking on cheaper passenger trains.

“Over the past two years, we have recovered 35 of 40 priority passenger-rail lines,” the department said.

Transport Minister Barbara Creecy acknowledged on October 1 that global pressures had strained households and transport operators.

“From our side, we are doing everything in ourower to make public transport more affordable,” she said.

On the political hot potato of the Road Accident Fund levy as another way to reduce fuel prices, Msibi referred to the National Treasury as the authority that controls the levy and its allocation through the budget process.

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Mpho Sibanyoni, Setumo Stone, Tshwarelo eseng Mogakane