Electricity and petrol hikes

IT’S A BLEAK July for cash-strapped consumers as the electricity and petrol price hikes will impact on the already high food prices.

This week the electricity cost for customers supplied by municipalities increased by 13% to 14% across the country.

Consumers also face the prospect of a petrol and paraffin increase this week after the AA predicted price hikes. The association forecasts increases of abound 23 cents a litre for petrol, 38 cents for diesel and 32 cents for illuminating paraffin.

“This increase is going to be very difficult for those who use paraffin for cooking, lighting, and especially heating as South Africa heads into the heart of winter,” said the organisation in a statement.

And tomorrow, the National Energy Regulator’s online public hearing process begins in the Western Cape ahead of a decision on Eskom’s demand for additional R8.4 billion for the Regulatory Clearing Account system. If approved, this amount would be added on to tariff increases for the 2021/22 financial year.

Civil society organisations have decried the increase stating that ordinary South Africans, particularly those in the lower income bracket, cannot afford steep year-on-year increases.

“For years civil society and industry bodies have been calling for the review of the Multi-Year Price Determination (MYPD) and Regulatory Clearing Account (RCA) – the model used to determine Eskom’s tariffs – is extremely flawed,” said Francesca de Gasparis, executive director of the South African Faith Communities’ Environment Institute.

“Even with evidence of less than prudent spending, time and time again, Nersa still finds that Eskom is owed an increase. We all know that the situation at the failed state utility is as a result of its own actions, resulting from years of mismanagement and poor governance.

“Working class South Africans will buckle under another ill-gotten increase, and those who are reliant on social grants will be even worse off.

“When electricity prices go up, so does everything else since suppliers’ costs go up and for businesses to be profitable, these increased costs need to be recovered somehow. And of course, it will be those of our people who can least afford it, that will continue to be sabotaged by Eskom and the government.

“Since these high price hikes keep rising well above inflation year-on-year while people’s incomes do not increase at the same rate, consumers will have less disposable income and the opportunities to improve their quality of life become out of reach. It has also been reported that food inflation in April 2021 was up 6.30% since April 2020.”

According to Statistics SA, consumer inflation in May stood at 5.2%, the highest since November 2018. May also saw fuel get 37% more expensive than it was a year ago.

“Petrol prices were 41.8% higher in May compared with the same month the previous year while diesel was 27% more expensive,” read the Stats SA report.

Food inflation also increased to a 46-month high in May. Annual food and non-alcoholic beverages inflation accelerated to 6.7% in May from 6.3% in April, with May’s readings at its highest since July 2017.

The monthly report on the cost of basic food items by the Pietermaritzburg Food and Economic Justice Group found that while the price of the basic food basket dropped by R23.85 in Cape Town from R4 043 May to R4 020 June, consumers were still paying R117.55 more than they did in September last year.

“Over the past 10 months the cost of the average Household Food Basket has increased by 7.1% or R271.90 to R4 128.23 in June 2021 (nationally). Mothers tell us that high food prices have hollowed out proper nutrition on the family plate,” said the organisation’s Mervyn Abrahams.

“This has removed an important line of defence against Covid-19 and other common illnesses and children and women are more vulnerable to disease. It is likely that the long queues of hungry people that we saw in the first and second waves requiring food support will again come to pass because the state has taken away all income support, wages have not gone up, unemployment levels remain high, jobs continue to be lost and food prices have gone up.”

Economist Dawie Roodt said: “The reality is the average consumer has been getting poorer and poorer over the last six years and while that is not the case for every South African given the gains seen in financial markets, the average South African cannot cope.

“And it is not just petrol price hikes and tariff hikes. The poor state of management at our municipalities and state owned entities like Eskom is a result of years of mismanagement and ordinary South Africans have to bear the brunt of that.”