Will the fuel cut really make a difference in the lives of SA consumers?

IOL News

11-05-2025

Food basket. The past few months have been among the toughest yet for citizens from all walks of life and the tiny petrol price cut announced by the DMRE will make no discernible difference in the lives of consumers who are still facing prices above R20,00 per litre at the pumps.
Image: Independent Newspapers
The pain continues for millions of South Africans who have battled their way through the past year, despite the cost-of-living crisis that has all but decimated household budgets across income groups, with no easing up of their financial burden on any front whatsoever.
'The past few months have been among the toughest yet for citizens from all walks of life and the tiny petrol price cut announced by the Department of Petroleum and Mineral Resources (DMRE) this week will make no discernible difference in the lives of consumers who are still facing prices above R20,00 per litre at the pumps. In addition, rocketing food prices and unsustainably high interest rates keep them locked into a debt cycle that they cannot escape,' CEO of Debt Rescue Neil Roets said.
This past week the DMRE published the official fuel price adjustments that took effect on Wednesday, 7 May, announcing a cut in the price of petrol of 22 cents per litre for 93 and 95 petrol, respectively and between 41 and 42 cents per litre for diesel.
This was largely due to steep declines in global oil prices in April as markets got rattled by US President Donald Trump's tariffs and trade wars, while the rand weakened slightly amid the shocks.
The average Brent crude oil price declined from $71.04 to $66.40 over the month, and the average international product prices for petrol, diesel and illuminated paraffin decreased during the period under review.
'While any financial relief is obviously welcome, authorities need to recognise that South Africans are at breaking point right now under the combined onslaught of food prices that have increased far above the inflation rate, interest rates that are still among the highest they have been in a decade and the relentless financial onslaught from Eskom for an essential service that impacts the survival of every man, woman and child,' Roets told Business Report.
The price of food is unsurprisingly at the top of the list of concerns for the majority of households across the nation, not least because recent price increases for basic foodstuffs now place nutritional meals out of reach, especially among lower-income families.
While the latest inflation data for South Africa showed an easing, food prices in the country saw a sharp increase. The April 2025 Household Affordability Index, confirmed the daily reality facing people today: the cost of survival is rising faster than people can keep up.
'The figures in the April 2025 Household Affordability Index, released by the Pietermaritzburg Economic Justice and Dignity Group (PMBEJD) , reflect a brutal truth—millions of South Africans are no longer coping,' Roets said.
Aliya Chikte, project officer at the Alternative Information and Development Centre (AIDC) said that although food inflation is slowing down, the average cost of a household food basket is unaffordable in the context of mass unemployment and deep impoverishment.
The latest PMBEJD report shows that the average household food basket, catering for a family of four, now costs R5 420.30, but a nutritionally adequate food basket is priced at R6 666.26.
That's a shortfall of R1 245.96, a gap that low-income households simply cannot close through income alone.
This means that workers earning the National Minimum Wage are R2 000 short on food after covering just electricity and transport, leaving only R453.28 per person per month for food, far below the Food Poverty Line of R796.
The effect of VAT on the household food basket is significant, with 22 of the 44 food items in the total household food basket subject to VAT. Food items subject to VAT made up 46% of the total cost of the household food basket in April. With zero-rated food items costing R2 929.32 and foods subject to VAT R2 490.97, VAT on the total household food basket amounted to R324.91.
'This means that 6.0% of the household food basket was made up of VAT. This is money that could be used to buy more food,' Roets said.
"Added to this is the sad fact that hard-working taxpayers will ultimately pay for any mistakes made by the government. When the Western Cape High Court stopped the tabled VAT hike, it passed the legal costs on to Treasury and Parliament. This means that taxpayers will end up footing this bill. Exactly how much remains to be seen, but it is likely to run into hundreds of thousands of rands," Roets said.
The latest BankservAfrica Take-Home Pay Index showed that nominal average take-home pay declined to 17,811 in March 2025, 2.5% lower compared to February's R18,272, due to intensifying economic headwinds both locally and globally that continue to pressure growth prospects and confidence levels.
This raises concerns over potential impacts on employment and earnings in the coming months despite the upward year-on-year momentum.