Poor, pensioners among hardest hit by inflation: Economist

Economist Dr Iraj Abedian says the poor and pensioners are among the hardest hit by the high inflation rate and fuel hikes in South Africa as prices of goods and services are on the rise.

Motorists can expect more pain at the pump this week after the government announced another hefty fuel price hike for July. The Department of Mineral Resources and Energy says that all grades of petrol will go up by between R2.37 and R2.57 a litre.

All grades of diesel will increase by R2.32 while paraffin sees a R1.66  increase per litre.

Abedian says government’s hands are tied.

“The government is literally caught between a rock and a hard place, they don’t have the fiscal resources to keep subsidising the price of petrol. They have at the same time missed about almost 20 years to get the national network of transportation such that our dependency on petrol as an economy becomes more efficient. We are highly inefficient in terms of tracking transportation, so all of that means the government has no option but to pass on the cost to the consumer at a time consumers are under pressure.”

SABC News Economics Editor Tshepo Mongoai says farmers are also struggling with an increase in input costs:

Meanwhile, spokesperson of the Automobile Association of South Africa Layton Beard says government needs to urgently review fuel prices in the country.

Higher fuel prices have been pushed up by a weaker rand/dollar exchange rate, rising Brent Crude Oil prices on the back of the conflict between Ukraine and Russia, and rising demand in China, among other factors.

The fuel price increase comes as the government’s 75 cents reduction in the fuel levy to help struggling consumers expires on 3 August 2022.

“The major increase to the fuel price remains the increase to international petroleum and that is being driven by the conflict in Ukraine which is contributing to supply and demand pressures. As long as this conflict is unresolved, the increases to fuel prices in South Africa and other countries remains likely.  We understand that government has little leeway in terms of international petroleum prices and the rand/US dollar exchange rate , which is why we have called and will continue to press for a review of the fuel price, an area where government has control of the fuel price.”

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