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President Cyril Ramaphosa has urged South Africans to tighten the belt, saying the attack by the US and Israel on Iran continues to disrupt the global economy, hampering job creation and economic growth.
Delivering the Presidency Budget Vote in the National Assembly on Tuesday, Ramaphosa said the Middle East conflict that has engulfed much of the region has set off a global oil crisis.
“The effects of the surge in oil prices − and of other critical supplies like fertiliser − are likely to undermine much of the progress we had made in bringing down inflation and the cost of living,” said Ramaphosa.
Last week, the Reserve Bank increased the interest rate by 25 basis points to 7%, bringing the prime lending rate to 10,50%.
At midnight, the price of petrol increased by R1,43/l for both 93 octane and 95 octane, but the price of diesel fell sharply to R3,24/l for 0.5% sulphur and R2,61/l for 0.005% sulphur.
The R17,2bn relief provided by the government, initially for April and May and then extended until end-June, was in the form of a R3 reduction in the general fuel levy to R1.10 and for diesel, initially from R3.93 to R0.93 and then to zero in May.
Data by the Pietermaritzburg Economic Justice and Dignity Group shows that the cost of the average household food basket has increased by nearly R170 since March.
The food basket cost R5,328.53 in March but had shot up to R5,497.26 in May. “We should anticipate that conditions will be difficult for the next while,” Ramaphosa said.
“These developments are unfolding as the latest employment figures from Stats SA show a decline in employment in the last quarter. We know from experience that it often takes time for investment to translate into economic growth and for growth to translate into jobs.
“But we must still be deeply concerned about the decline in employment, because it is about people’s lives and livelihoods,” the president said. “These difficulties underline the urgency of the work we are doing. We must move faster and with greater focus to implement our priority actions.”
The latest Pietermaritzburg Economic Justice and Dignity Group report further shows that in May, the child support grant of R580 was 32% below the food poverty line (R855) and 40% below the average cost to secure a basic nutritious diet for a child (R967,08).
The cost of the foods prioritised and bought first in the household food basket is important. The core foods are bought first, and these foods ensure that families do not go hungry while ensuring that meals can be cooked, the report said.
“When the prices of core foods increase, there is less money to secure other important, mostly nutritionally rich foods, which are essential for health and well-being and strong immune systems.
“The data shows that the core foods contribute 53% of the total cost of the household food basket. These foods must be bought regardless of price escalations,” the report said.
“The high cost of core staple foods results in a lot of proper nutritious food being removed from the family plates. The consequences of high costs on the core foods have a negative impact on overall household health and well-being and child development.”
South Africans are very concerned about the situation.
Nkosana Buthelezi believes the financial squeeze will get worse. “We just have to tighten the belt and treat each month as it comes, drive effectively and cut things such as entertainment, which is not much, but try to cut it because, unfortunately, you can’t cut essentials such as school fees and food,” he said.
Nosipho Dlamini said coping will be difficult. “It’s going to be quite hard for me because with the repo rate having gone up as well, this just means that everything is going up. The middle class will be deeply affected.
“I live in Roodepoort, and I work in the Joburg CBD, so petrol has become extremely expensive. I can hardly even buy bread or put food on the table. It doesn’t make sense for us to keep paying more and more for petrol, for food, to just live,” she said.
Mametlwe Sebei said taxi fares have gone up. “Whenever the price of fuel increases, this justifies increases in food. Given the diesel fuel going down, mostly businesses will benefit from that, not ordinary citizens, but when prices increase, they are passed down to citizens. Price control in this case is necessary because ordinary citizens can’t afford the hikes.”
