It was announced last week that South Africa had slumped into a recession. On the 4th of September, the latest Gross Domestic Product (GDP) data was released which signalled that the South African economy had hit a recession. Almost immediately the rand per dollar exchange rate weakened from R14.88 to 15.69 per US dollar.
How Does This Affect Consumers?
The weakening rand affects all importers that have not taken any foreign exchange cover, which acts as an insurance against these exchange rate movements. The price impact on imports on petroleum products will be immediate due to the lack of this cover. We can therefore expect another large increase in the petrol price. According to IOL, the price of petrol is likely to increase to above R17 per litre in October.
By entering a recession, South Africa is also likely to be downgraded or further downgraded by credit agencies. This makes the overall sentiment of the country rather negative as foreign investors would be forced to sell their assets.
The Increase In Petrol Price Has Large Impacts
Transport is a large expense for many companies. Increases in transport costs mean that the cost of goods and services is likely to increase as higher costs are transferred onto the consumers. Day-to-day living expenses such as groceries and transport will go up which means that consumers spending power decreases.
Consumers will have to tighten their belts and budget properly to overcome these increases. There have already been a number of increases this year and it doesn’t seem to be getting any easier for the man on the street.
What Can You Do To Avoid Budget Trouble?
If you find yourself struggling to pay debts and afford your basic living expenses, you need to have a close look at your budget. Make sure you have enough money each month to afford all of the necessary items.
- Plan ahead by creating a realistic and achievable budget
- Set yourself achievable financial goals
- Cut down on luxurious expenses and find ways to save money
- Avoid going to the shops too much
- Try not use debt to fund this gap in your budget
Debt is expensive and adds to your monthly expenses. It may seem a good idea to receive money now in the form of a loan, but the consequences of the debt are often an afterthought. Rather try to save up for expensive items and use cash to pay for them. If your loan and credit card repayments are too high, try looking for a consolidation product. Chat to a qualified debt expert about consolidation loans and other debt management tools and products.