1 March 2022
MISA PRESS RELEASE
WE ARE GOING TO HAVE TO DIG DEEP INTO OUR POCKETS
MISA, the Motor Industry Staff Association, warns the Union’s nearly 53 000 members that the next few weeks will require everyone to dig deep into their pockets and save money where they can.
South Africa’s economy has hit a “double whammy” with the rapid fuel price increase at midnight according to economist Dr Roelf Botha.
“Everything in the value chain will become more expensive in the next few weeks. The reality is that families will struggle with less money in their budgets to spend,” says Botha.
Martlé Keyter, Chief Executive Officer: Operations at MISA, says the fuel price increase on both grades of petrol by R1.46 per litre and the diesel increase between R1.44 and R1.48 per litre will also have a negative impact on the positive vehicle sale predictions for 2022.
South Africa’s total vehicle sales rose 19.5% year-on-year to 41,382 units in January 2022, according to Naamsa.
The National Automobile Dealers Association (NADA) predicted a 10% to 15% increase in new vehicle sales for 2022.
“These predictions will be impacted by how long the war between Russia and Ukraine lasts. If it is only a few weeks, we will see the fuel price dropping. If the situation drags on for months, it will have a devastating impact on the cash flow of individuals and on vehicle sales,” says Keyter.
The fuel prices rocketed globally after Russia invaded Ukraine last week. Russia being one of the world’s largest producers of oil and natural gas.
Botha says the impact would have been much worse if the Rand had not showed positive movement against the US currency in recent weeks.
Dr Ferdi Meyer, director of the Bureau for Food and Agricultural Policy (BFAP), says the rise in the price of diesel impacts on every aspect of the input cost of the farmer – from the machinery used to plant, the price of fertilizer (which doubled over the past year) to transportation.
“Road transport is used for the most goods, making it even more expensive. The impact would have been less severe if South Africa had a proper functional railway service making transport much cheaper,” says Meyer.
According to Meyer more than a third of South African households spend between 40% and 50% of their monthly income on food. The price of wheat increased by 8.43% since the beginning of 2022. Russia and Ukraine accounting for 35% of the world’s wheat exports.
“There is no room for cutting corners. Families will have to manage their budgets very effectively to muster the storm,” says Meyer.