Record fuel prices bound to impact consumer spending - economist
Agricultural economist Dawie Maree says the latest fuel price increase is likely to have a big impact on consumers' spending patterns.
The Department of Mineral Resources and Energy had announced yet another massive hike in the fuel price for March.
The latest hike comes amid the war between Russia and Ukraine - a factor which could see the price of brent crude oil spike even further.
The brent crude oil price increased to $110 a barrel on Wednesday.
Petrol spiked by R1.46 per litre on Wednesday, while diesel increased by between R1.44 and R1.48 per litre.
Maree says consumers will have to readjust their budgets.
“We will definitely see a shift in spending patterns where consumers would rather move to the cheaper options that will be available.
"Instead of red meat, they would rather go for chicken, and they will move back to the more staple food like mealie meal. So it is really a very bad time for this kind of increases,” says Maree.
“Responsible spending will obviously be important. Where possible consumers might have to cut cost on travel costs, and then spending patterns on luxury products is also important but also is very important not to use credit for food."
Maree says the oil price is likely to increase again if the tensions between Russia and Ukraine continue.
“If the conflicts continue and last longer we will definitely see another increase in oil price. First, the fuel price is dependent on the oil price, so with the vitality in the oil market it will hurt consumers a bit more but the more stable currencies like the dollar will benefit while the emerging economy currency will be hurt. We will see that impact on a fuel price as well."
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