BUSINESS PRODUCTION COSTS SET TO INCREASE

MBABANE – The huge jump in fuel prices in South Africa between E1 and E1.24 is likely to hike production costs for businesses, especially in the agricultural sector.

The price of diesel, for instance, which is imported from the neighbouring republic for usage, mainly in the agriculture sector, effectively means farmers will have to pay more to produce the same volume of goods.

An economist who spoke to the Business Desk, on condition of anonymity, forecasted that when farmers have to absorb prices that which increase their input costs, they have to recover them somehow, and they do that by increasing their own prices.

“The price of goods in general, especially agricultural produce, which gets mainly imported from South Africa will sky-rocket,” the economist projected.
He further pointed out that in the medium to long term, it would definitely have an impact on all public-transport fares, depending obviously on when those fares would be raised.

Affected

“But I think more importantly, it’s going to affect not only motorists, but all road users. What do I mean by that? I mean all people who drive or use public transport are going to be affected,” said the economist.

Business Day reported that a well-known economist earlier tweeted that from now on business partners should expect to have meetings with Skype, in order to avoid schlepping (travelling) around town to have a face-to-face meeting. The fuel price is at a level where people may very well have to think about doing things differently, just in order to save a coin or two.

It was further advised that there would be no one-solution-fits-all type of answer in terms of how to handle the situation going forward.

Optimally

“Certainly, we would advise people to make sure their vehicles are in good condition and running optimally and using the right type of fuel. Well-maintained, well-serviced vehicle use is certainly the first thing,” it was stated.
It was further advised that people will need to re-look at their budgets and re-jig (adjust) them in the sense of looking at what they can afford to do without, at the expense of fuel.

Increase

Business Day reported that according to the latest increase announced by the Department of Energy (DoE), the price of unleaded 93 petrol rose by 99 cents‚ unleaded 95 by E1 and diesel by E1.24.
Illuminating paraffin now costs an additional E1.04 and liquefied petroleum gas (LPG) E1.79.
The price change came into effect at midnight on Tuesday.

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