Cascading effect on job losses expected
The weakness of the South African rand coupled to the short supply of oil pushed up the price of fuel, causing the price of petrol to rocket by 35c a litre and diesel by 30c a litre from Wednesday, 5 October.
A price increase of this magnitude will have a definitive impact on inflation, which is already on the rise, and will push up the production price index even further. It was announced earlier this week that the PPI shot up by 9,6% during August, which was higher than expected.
The increase in fuel price is further bad news for our struggling economy. Workers will have to pay more to commute to work and back, and will soon have to pay more for food and other consumer good. This means they will have less to spend, causing the demand for consumer goods to drop further, which in turn will have a cascading effect on job losses.
We can only hope that our currency will stabilise, which could mean a lower fuel price towards the end of 2011.