With the oil price expected to rocket in the coming months on the back of political upheaval in the Middle East, most notably Libya, the global economy is expected to take a pounding.
Bloomberg reported that the sudden spike of oil towards the $120 mark was due to Libya losing a large percentage of its operating capacity in the oil industry. The robust form of the rand will not be enough to cushion South Africa against huge hikes in the cost of fuel.
On the web: Oil price is a game changer
The knock-on effects on every aspect of our economy are obvious and inflation is expected to take off. This is expected to impact on the cost of housing in the middle segment, as people will battle to find disposable income to make investments in this area.
Along with the inevitable hikes in the price of petrol in South Africa comes the general fuel levy increase of 10c a litre, announced on Wednesday by Finance Minister Pravin Gordhan.
Business Report said, “The impact will spread through the economy, pushing up prices of goods and services as transport costs rise.”
Durban residents are also bracing for heavy increases in the cost of services: electricity, water and rates. The city’s draft budget proposes the following scary hikes: A 22% hike for electricity; 6.5% on average for rates; and 9.5% for residential water. Business water rates are also expected to increase significantly. Ratepaters’ Associations have taken their objections to the proposed increases to the city.
So buckle up for a rough time ahead.