The blistering pace of petrol price hikes has pushed SA’s fuel inflation to a staggering 34% over the past year. Throw in a 14% jump in the cost of electricity, and the cost of energy is far outpacing income growth, economist Kevin Lings pointed out this week.
Of course, we cannot see these individual price hikes in isolation. What we pay for power and fuel is a consequence of failure across multiple levels: an inability to fix Eskom and bring cheaper power online; relentless tax rises to pay for bankrupt state-owned entities like the Road Accident Fund; and incoherent policy writ large in a cratering currency.
All of which means SA is unable to withstand external shocks, like the resurgent oil price. This toxic brew is devastating for households, which will now pay much more for transport, power and food. But it is also a huge blow to business.
These energy price hikes will ensure that some investments will be canned. Running a business in SA means having almost everything stacked against you. That’s a recipe for contraction, not growth. It’s high time the government realised this — and seriously examined how to slash the extra taxes built into the fuel price.