After the clock hit midnight, petrol prices pumped their way upwards, this increase further puts pressure on the already strained consumer with economists warning that 2016 will be a tough financial year.
“The main reason for these hikes is of course the weakening of the rand against the dollar, it continued to weaken compared to the previous cycle and it has actually taken almost 40 cents on the petrol price and almost 30 cents on the diesel and paraffin prices,” said Robert Maake, Director of Fuel Pricing Mechanism in the Department of Energy.
He explained that the pump prices of petrol for grades 95 and 93 would increase by 6 cents per litre however for diesel, the price will decrease by 62 and 63 cents per litre, as well as paraffin which decreased by 79 cents per litre.
“The disparity between diesel and petrol is mainly because of the oversupply of diesel in the international market - there is a lot of diesel that was earmarked for the winter season in Europe, unfortunately the winter season this time was very mild and they could not use all the diesel,” said Maake.
He adds how China is also importing a lot of diesel into the market, further increasing the oversupply of diesel.
The price of petrol had to increase Maake said because, “there were some refineries that went on unplanned shutdown in USA, particularly late November, December so that led to a constraint of petrol in the market - hence you see the price of petrol not aligned to that one of diesel”.
Maake says the department is discussing ways to keep fuel reserves to keep prices unaffected by global factors.
“We do have some reserves in the country that are held by the strategic fuel fund but we also know some of the tanks are used for commercial purposes so anybody can use the tanks to store their own petrol.”
“However as government we are still finalising a policy on strategic stocks and commercial stocks which will then compel even the oil companies to keep stock for a particular period in time,” Maake added.
This in addition to the recent repo rate increase and food prices going up, the average consumer will barely have a cent to put away, let alone enjoy.
“2016 is already proving to be a testing time for the average consumer. Food prices have begun to rise as a result of the drought, electricity increases are eminent and water usage fines looming,"said Wendy Monkley, Head of Marketing at DebtBusters.
"Add to this increased debt repayments, annual increases in school fees, insurance and general living expenses and you have a heart-breaking situation where many South Africans can no longer meet their monthly financial obligations,” Monkley added.