The price of everything is set to rise: How October's fuel price hikes will affect your wallet - IOL

Brace your wallet: Essential goods, interest rates, and commute costs are set to rise as fuel prices hit another record high this October.

Rising fuel prices are devastating household budgets, affecting everything from transport costs to the price of everyday goods and services and even interest rates.

This effect is set to be amplified from this Wednesday, with another round of significant fuel price hikes forecast.

According to Annabel Bishop, chief economist at Investec, October’s increases will likely push CPI inflation towards the 5.0% mark, potentially even fuelling another rate hike in November.

“The persistence of the oil price shock has had a negative impact on real incomes, with upward pressure on headline (CPI) inflation, and October’s fuel prices are now to exceed the highs of Q2.26, with debt levels increasing further for consumers,” Bishop said.

The latest Central Energy Fund data points to petrol price increases in the region of R3.18, while diesel is looking set to rise by between R2.80 for 500ppm and R3.15 for 50ppm.

The increases are expected to take effect on Wednesday, October 7, and come after motorists were already hit by significant fuel price increases in September.

If the latest projections hold and no government relief is announced, 95 Unleaded could cost around R29.23 a litre at the coast and R30.10 in Gauteng, while 93 could reach around R29.94 in Gauteng. Prices of 50ppm diesel could also exceed R34 a litre at the coast and R35 inland once retail margins have been factored in.

The government has so far indicated that it does not plan to intervene with temporary tax relief measures, as it did in April when the General Fuel Levy was cut by at least R3 a litre for two months.

Mineral and Petroleum Resources Minister Gwede Mantashe said last month that there were no immediate plans to cushion households and businesses from rising fuel costs.

For motorists, however, the impact is perhaps best illustrated by looking at the cost of every kilometre driven.

IOL calculations show that a small car consuming around 5.5 litres per 100km would have cost about R1.11 per kilometre in fuel in March. By September, that had risen to R1.47, with October’s projected prices pushing it to around R1.65 per kilometre.

For a compact SUV using 8.0 l/100km, the cost rises from around R1.61 per kilometre in March to R2.14 in September and a projected R2.40 in October.

The increase is even more pronounced for a diesel-powered bakkie consuming around 9.0 l/100km. Its fuel cost rose from about R1.89 per kilometre in March to R3.16 in September, with October set to push it higher still.

With the average South African motorist estimated to drive between 1,500km and 1,800km a month, those increases quickly add up.

A small car such as a Suzuki Swift, for example, would have cost about R1,666 to fuel over 1,500km in March. By September that had risen to around R2,208, with the October projection putting the monthly cost at about R2,470. For an SUV such as a Chery Tiggo 4, assuming consumption of 8.0 l/100km, the equivalent fuel bill rises from around R2,423 in March to R3,211 in September and a projected R3,593 in October.

The vicious cycle of higher fuel prices.

Bishop said the latest oil-price shock was being driven by concerns over the impact of the war in the Middle East on the supply and price of oil, petroleum products and feedstocks, with fears that the conflict could spread further across the region.

She expects another 0.25 percentage point increase in the repo rate to be priced in for the remainder of the year. If the rate rises again, taking the prime lending rate from 10.75% to 11%, the effect would be felt by households before they even fill their tanks.

A R1.5 million home loan over 20 years would increase from about R15,228 to R15,483 a month, adding roughly R255 to the repayment. A R500,000 car financed over six years would rise from about R9,453 to R9,517, adding another R64.

For a household carrying both debts, that amounts to about R319 a month before higher fuel, transport and food costs are taken into account.

At the same time, incomes have barely kept pace with rising costs.

PayInc data shows average take-home pay increased from R21,399 in March to R21,622 in August, a rise of just over 1%. In real terms, average take-home pay in August was R20,164, 2.6% lower than a year earlier.

Higher fuel costs can also feed into the price of goods, although the effect is not necessarily one-for-one.

The Road Freight Association says fuel accounts for about 35% to 55% of road-freight companies’ operating costs. Based on the September diesel increase, it estimated that freight operating costs could rise by around 4% to 6%.

More than 80% of land-based freight is transported by road, including food moving between farms, processors, distribution centres and retailers.

PSG senior economist Johann Els said there had so far been little visible pass-through from higher petrol and diesel prices into food and other consumer goods.

“Food inflation has actually come down from earlier this year to where it is now,” he said.

Instead, consumers forced to spend more on fuel and transport have less money available for other purchases, creating what Els described as a substitution effect.

Wholesalers and retailers may also absorb some of the higher costs rather than pass them on in full and risk losing sales, he said. Higher fuel costs could therefore create “deflationary forces” as consumers spend more on transport and less elsewhere, while businesses try to protect sales volumes.

Nevertheless, food remains a significant pressure on household budgets. The Pietermaritzburg Economic Justice and Dignity Group’s Household Affordability Index shows the cost of its food basket has increased 2% year-on-year to just under R5,500, while the average cost of the foods prioritised and bought first in the household basket has risen 2.9%.

Taxi fares could soon be affected too.

The impact could also reach public transport users, although the South African National Taxi Council (Santaco) says it is too early to say whether taxi fares will increase in October.

Santaco spokesperson Mmatshikhidi Rebecca Phala said taxi associations had implemented only one fare increase since fuel prices began rising in March, while operators were also dealing with higher maintenance, administrative and other operating costs.

Any fare increases would be decided by individual associations based on their costs and margins, following consultation with commuter organisations. Phala said Santaco’s Taxi Fare Index generally discouraged increases of more than 10% at a time unless conditions became exceptionally difficult.

Santaco has also called for an equitable public transport subsidy and said it remained open to temporary government relief measures as operators face mounting costs.

The South African Reserve Bank’s latest Quarterly Bulletin shows household debt stood at 62.2% of disposable income in the first quarter, while the cost of servicing debt was 8.4%.

Consumers already under financial pressure have even less room to absorb another increase.

DebtBusters’ 2026 Money-Stress Tracker, based on almost 18,000 respondents, found that 53% were spending more than 40% of their take-home pay on debt repayments, up from 48% last year.

Among respondents taking home more than R20,000 a month, 75% were spending more than the recommended 30% on debt.

Consumers applying for debt review are even more stretched. The South African Financial Pressure Index found that the median applicant to Debt Solutions 4U between June and August was already committing 58.4c out of every R1 they took home to debt repayments.

That data covers 1,174 debt-review applicants and is not representative of South African households generally.