South Africans face mounting financial pressure as fuel prices soar

South Africans are paying more to fill their tanks, but the impact of the latest fuel-price increase could extend beyond motorists.

From Wednesday, October 7, petrol 95 increased by R3.33 a litre, while petrol 93 rose by R3.12. Diesel increased by between R2.84 and R3.24 a litre, depending on the grade.

In the coastal pricing zone, which includes Cape Town, 95 petrol is now R29.38 a litre.

The Department of Mineral and Petroleum Resources said the average Brent crude price rose from $87.89 to $101 a barrel during the review period, while global supply concerns and higher shipping costs also pushed prices higher.

But what does this actually mean for everyday South Africans?

For someone filling a 50-litre tank with 95 petrol, the latest increase adds roughly R166.50 to a full tank.

If that person fills up twice a month, that is about R333 more every month, or almost R4,000 a year, assuming prices remain at this level.

For households already carefully managing food, electricity, school costs, debt and transport, that extra money has to come from somewhere.

And this is where the bigger economic effect begins.

Almost everything that moves around South Africa requires energy.

A truck carrying food to a supermarket uses diesel. A bakery needs to transport flour and other ingredients. A plumber or electrician needs fuel to reach customers. A delivery company needs fuel for its vehicles.

Farmers also rely heavily on diesel for machinery and transport.

When fuel becomes more expensive, businesses face higher operating costs. They then have a choice: absorb those costs, reduce expenses, or pass some of them on to customers through higher prices.

Business Unity South Africa has previously warned that sustained fuel increases can put pressure on operating costs, balance sheets, employment and investment.

The impact is not limited to people who own cars.

Higher fuel costs put pressure on taxis, buses, delivery services and e-hailing operators.

In June, Stats SA recorded a sharp increase in transport inflation, with fuel prices rising 34.3% over the preceding 12 months at that point. Passenger transport prices also increased, including minibus taxi fares and e-hailing services.

This means someone who never fills a petrol tank can still feel the consequences of a fuel increase through the cost of getting to work, sending children to school or travelling to the shops.

Fuel is particularly important because it can influence the price of many other goods and services.

Investec chief economist Annabel Bishop has warned that the latest increases could push consumer inflation towards the 5% level.

But there is an important point consumers should understand: a fuel increase does not automatically mean everything else will rise by the same amount.

Businesses make different decisions depending on their costs, competition and customers.

PSG senior economist Johann Els noted that some businesses may absorb higher fuel costs rather than risk losing customers by increasing prices. At the same time, households forced to spend more on transport have less money available for other purchases.

The fuel increase is largely outside an individual household’s control, but the knock-on effect can be managed to some extent.

Planning trips to reduce unnecessary driving, combining errands, car-sharing where practical, and comparing fuel prices between nearby stations can all help.

For households under pressure, it is also worth looking at the total monthly cost of transport, rather than only focusing on the price displayed at the petrol station.

The bigger lesson is that fuel is not simply another household expense.

It is an economic input that affects how people, food, goods and services move around the country.

So while the first shock is felt when you tap your bank card at the fuel pump, the real impact of a fuel-price increase can take weeks or months to work its way through the household budget.

And for many South Africans, that is where the real pain begins.

*The views expressed in this article are those of the writer and do not necessarily reflect the views of Cape Community Media Group.