News Column

'Blame fuel price hike on weak rand'

July 4, 2014

THE WEAK rand and indecision by the government are among the main factors responsible for the latest petrol price increase, says the Cape Chamber of Commerce and Industry.

"It is no use blaming the increase in the petrol price on world events or conflict in the Middle East because one of the main reasons is right here in South Africa where it is our weak rand that makes petrol so expensive," said chamber president Janine Myburgh. She said motorists were paying the price for unrealistic policies, indecision by the government and over-regulation of the private sector, which had curtailed growth in the economy.

"We have seen our credit ratings slip and this affects the value of the rand and borrowing costs. A weak rand buys less oil and puts less petrol in your car," she said.

"When you add up the massive wastage of public money spent on subsidising state-owned enterprises like SAA, the over-budget and |long-delayed Eskom power stations, the high cost of the public service, strikes and wage increases well above the inflation rate, then it is not surprising that the rand is weak and it costs more to fill up your car. It is time we realised that these things are all |connected.

"In addition, high electricity prices and corruption undermine our competitiveness and discourage investment. And when you add scare stories about expropriating 50 percent of commercial farms without compensation, it is not surprising that the credit rating agencies are marking us down."

She said that consumers should, in the meanwhile, consider buying smaller cars and use public transport.

The rand had another poor run this week on the back of a nation-wide engineering strike by Numsa.

The rand lost over a third of a percent against the dollar on Tuesday after Numsa said its members would revert to a higher wage demand after negotiations with employers |"collapsed".

The strike would cost the economy more than R300 million, or 0.014 percent of GDP, a day, an employers body said.

This week Finance Minister Nhlanhla Nene said South Africa's economy was expected to grow at a moderate pace but was still performing below potential.

"Attaining the desired levels of growth over the medium term is an important collective responsibility which calls for far greater synergy and cooperation," Nene said at the launch of the new tax season.

The Treasury was still targeting revenue collection of nearly R1 trillion for the 2014/15 financial year.

Despite the economic doom and gloom, consumer confidence in economic prospects increased 10 points during the second quarter of 2014.

The FNB/BER consumer confidence index (CCI) showed a rebound from -6 points during the first quarter of the year to +4 points.

This was the highest rating since the third quarter of 2011.

Some consumers may also have been heartened by the conclusion of national general elections on May 7.

High fuel prices, rising food inflation, industrial action, unemployment, and higher interest rates were expected to prevent improved growth in real consumer spending.

The price of petrol increased by |29 cents from Wednesday.

The increase was due to changes in crude oil prices, the rand-dollar exchange rate and the prices of |finished products, said spokesman Johannes Mokobane last week.

"Furthermore, the crude oil price increased on average during the |period under review and climbed to the highest level since September |last year."

Staff Writer and Agencies

Cape Argus

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Source: Cape Argus (South Africa)

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