(Photo: Nico Strydom/Maroela Media)
The trade union Solidarity hopes the expected increase in the cost of living due to the biggest fuel price increase in South Africa’s history will be short-lived.
Even after the treasury agreed to give relief of R3 per liter on the fuel levy, this fuel price increase is still a big blow, says Theuns du Buisson, economic researcher of the Solidarity Research Institute (SNI).
Diesel prices in particular shot up with an increase of R7.37 per liter for diesel, which represents an increase of 39.6%. “This means the fuel cost to transport cargo from Gauteng to Durban is now more than R2 200 more expensive. The additional cost for a cargo to Cape Town is more than R5 300.
“The effect of that is that inflation on all items that must be transported will rise sharply. Imported products’ costs will inevitably rise more sharply, because the impact on all transport costs will be substantial,” says Du Buisson.
According to him, the sharp rise in diesel prices will also have a noticeable impact on public transport.
“To absorb a cost increase of almost 40% is impossible. We can expect that taxi and bus services will raise their prices drastically in the coming weeks.”
He says the cost will be passed on directly to commuters who are already under severe financial pressure.
Although Solidarity welcomes the relief in the fuel levy, the trade union believes the treasury must guard against putting households and businesses under further pressure when lost tax revenue is recovered in the future.
“There is great secrecy about the amount of funds that the central energy fund holds in accounts such as the equalization fund.” fuel increase
Du Buisson says now is the right time to use these funds and other emergency funds to ensure taxpayers are not disadvantaged in the long run to pay for the current relief.
However, he does not believe that the crisis will continue for very long and says that if the Strait of Hormuz is reopened, international oil prices will return to normal within weeks.