Summary
According to an article published on the 23 May 2019 on a website called ‘Moneyweb’, it was stated that fuel prices took majority blame for the increase in the cost of living. The article speaks about how the fuels prices have had an effect on transporting, goods and services as well as many other aspects in different industries. Statistics have been collected from ‘Stats SA’ or commonly known as Statistics SA’s Consumer Price Index (CPI).
Analysis
In April 2019, the inflation rate was 4.4% which was stable. However, since the 12% increase in fuel prices, aspects such as transport have resulted in an increase of 7.4%. This was an increase in the cost of transporting. This then affects the prices of goods and services that require transportation. This plays a huge role in the inflation rate because certain business require transportation to deliver their products to a retailer to be sold to a consumer.
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According to Stats SA, CPI prices on admissions, such as gas prices, increased by 8.3% since last year. The article states that if administration prices were avoided the CPI would’ve only increased by 3.7% which could’ve been a massive deal for consumers. Not only have administration prices increased but also the price of cooldrinks. The price increased by 9.4% over the past year because of the new rates on the cost of transportation. Companies such as Coca-Cola, transport 600 cases, which contains 24 bottles each. Since the amount being transported is high the selling price would also be high for the consumer. This also takes the sugar tax into consideration.
However, petrol stations try their best to lower their prices on goods to gain competitive advantage. To do so, the different petrol stations come up with growth strategies. For example, garages such as Shell and Engen who share a joint venture with steers would introduce a ‘Wacky Wednesday’ deal where you can buy two burgers and get the other free.
Since there's been a 9.4% increase in cooldrinks and sugar tax has also increased most garages have been promotions into place. Shell has 3 promotional deals. The first promotion includes a Nestle chocolate bar, Pringles and the consumers choice of either a 5ooml Coke or 750ml Bonaqua pump for only R19.90. This not only gives consumers a choice but also a cheaper option. Shell also has many ‘open road essentials’ such as 2x cans of 330ml Liqui Fruit for the price of R19.90. Shell currently sells petrol 95 ULP for 34.8 cents a liter and diesel 71.25 cents per liter. Although these prices are high-priced, Shell has put reward programs in place.
Consumers get the option to either get their price discounted using a Clicks Clubcard or Discovery insure. With the Clicks Clubcard, 10 cents per liter of fuel is equivalent to 50% of fuel spend back. Discovery insure gives back 50% of fuel spend for the number of points earned.
Conclusion
In conclusion, the people of South Africa are aware of how fuel prices have an effect on many others things that consumers or businesses buy on a daily basis. With an unemployment rate of 29% the cost of living affects those without jobs. They have no means of income and makes it hard for them to provide for themselves or their families.
References
- Hilton Tarrant. (2018). Fuel Rewards Programmes Compared. Available: https://citizen.co.za/business/1973735/fuel-rewards-programmes-compared/ Last accessed 4 August 2019.
- Bradley Prior. (2019). Petrol Prices Increase in South Africa. Available: https://mybroadband.co.za/news/motoring/314773-petrol-price-increase-for-south-africa.html Last accessed 4 August 2019.
- Shell. (2019). Petrol Price Update. Available: https://www.shell.co.za/motorists/shell-fuels/petrol-price.html Last accessed 4 August 2019.
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