As the year draws to a close, South African consumers continue with the trend faced all through 2022 of higher fuel costs and interest rates.
This comes after the South African Reserve Bank (SARB) hiked the repurchase rate (repo rate) in the country on Thursday for the 7th time in a row further by 75 basis points from 6.25% to 7% per year.
This means that the prime lending rate in South Africa now sits at 10.50% which spells bad news for consumers, especially for those who are repaying bank loans.
This means that the level of the repo rate – the rate at which the SARB lends money to commercial banks – is now above the level prevailing before the start of the Covid-19 pandemic in March 2020.
Listen to Frank Blackmore, Lead Economist at KPMG share his reaction to the rate hike below:
Meanwhile, as many consumers will be adjusting their budgets to deal with the increase in interest rates, early data made available by the Central Energy Fund points to yet another petrol price increase in December.
Based on the latest available daily data and thanks to a stronger rand, consumers could be looking at an increase of 50 to 70 cents.
The mid-month data points to the following increases:
- Petrol 93: increase of 98 cents per litre;
- Petrol 95: increase of R1.09 per litre;
- Diesel 0.05%: decrease of 35 cents per litre;
- Diesel 0.005%: decrease of 26 cents per litre;
- Illuminating paraffin: increase of 31 cents per litre.
Official petrol price adjustments are expected to be announced by the Department of Energy at the end of the month and will come into effect on December 7.
Tracey-Lee Solomon, an economist from Stellenbosch University’s Bureau for Economic Research, said the petrol price increase predicted was largely a result of increasing crude oil prices.
For the month of October, Brent crude averaged around $93.60 per barrel.
So far, the crude price has averaged more than $95 per barrel in November. Fortunately, a stronger rand has offered some relief.
BUSINESS REPORT