Petrol price affects many products and services
Regular petrol price increases affect a wide variety of products and services, often placing additional strain on student budgets.
On 7 April 2021, the Department of Mineral Resources and Energy released a media statement announcing another hike in the price of petrol in South Africa. This was one of the biggest hikes ever. Petrol went up (per litre) by R1 for 95-octane unleaded and and 95 cents for 93-octane unleaded, respectively, and diesel by 65 cents. The exception was coastal municipalities, who pay slightly less due to lower transportation costs.
Dawie Klopper, an investment economist at insurance company PSG Pretoria, said high petrol prices mean grocery stores need to pay distributors more for their products. Because transportation is more expensive, shops have to decide between losing a part of their profit or increasing the prices of their products.
“The dilemma that people have, is that shops put up their prices, but the next month when the petrol price goes down again, the shops keep their prices the same,” Klopper said. An example of this is that in May the petrol price was reduced by 13 cents per litre, and diesel was reduced by 32 cents, but retail and transportation prices remain the same.
threestreamsmedia conducted a survey on the North-West University’s (NWU) Potchefstroom campus. We asked 11 students if they knew that in-store products’ prices usually increase because of the petrol price increase.
Four of the surveyed students said that they were already aware of the price increases of consumer goods, but the other seven were completely unaware.
Philip Snyman, senior financial advisor at Old Mutual Potchefstroom, said that the petrol price has a direct influence on the Consumer Price Index (CPI) or inflation. He said that the CPI measures price changes in an average basket of consumer goods and services purchased by households. Simply put, CPI measures how much more it will cost to survive on a yearly basis.
Snyman said, “If I buy bread, milk and eggs today at PicknPay and in a year’s time go back and buy the same products from the same store, the price difference will reflect the CPI.” He added that the increased costs that stores are faced with falls onto consumers.
The same 11 students were asked if they understood how the Consumer Price Index works. Only one of them said yes.
threestreamsmedia asked Snyman if he had any advice for students who are worried about their spending capabilities. He said that every student should know how a budget works and should draw up a monthly and yearly budget. If you can work according to your budget, you will be able to manage your money better and control what your money is being spent on.
Snyman’s final suggestion was that students should have a safety net account or investment in place. This could help when they have sudden unexpected financial needs.