SA economy grows 0.6% amid fuel price decreases, but consumers still struggle

This past week saw fuel prices decrease in South Africa while the country's Gross domestic product (GDP) grew by 0.6%. 

The Department of Mineral Resources and Energy (DMRE) announced fuel price decreases across the board. 

The department said that the adjustments were due to lower average oil prices when compared to the previous period, as well as a stronger rand against the dollar, which led to the reduction.

Petrol prices came down by 7 cents per litre, while Diesel prices decreased by 17 and 23 cents a litre, while Paraffin decreased by 8 cents and LP Gas decreased by 2c p/kg.

The economy grew less than expected in 2024 but managed to dodge a technical recession after ending the year slightly higher and narrowly avoiding a technical recession in a year marked by uncertainty.

Data from Statistics South Africa (Stats SA) on Tuesday showed that real gross domestic product (GDP) increased by 0.6% in 2024, following an increase of 0.7% in 2023. 

The growth outcome fell short of projections from the South African Reserve Bank and the National Treasury, which had anticipated a rebound to 0.8% this year, bolstered by nearly 300 days of uninterrupted power supply.

Neil Roets, CEO of Debt Rescue, however, expressed deep concern over the ongoing financial strain on South African consumers, despite the modest GDP growth of 0.6% in the fourth quarter of 2024.

"While the agricultural sector’s 17.2% surge is notable, these figures offer little relief for households that continue to struggle under the weight of a severe cost of living crisis. The reality is that many consumers are still relying on credit to buy basic necessities like food, simply to survive. Rising unemployment, stagnant wages, and the contraction in manufacturing have only worsened financial stress," Roets said. 

He added that with electricity price hikes looming in April, household budgets will be stretched even further, forcing already over-indebted consumers into an even more precarious position.

"The 7c per litre decrease in petrol and 18c for diesel provides no meaningful relief. With most goods transported by road, the minimal diesel reduction is unlikely to lower food and transport costs significantly, if at all. For struggling households, this means that everyday expenses will remain high, with no real savings in sight. As the country approaches the upcoming budget speech, we at Debt Rescue recognize the growing financial distress many South Africans are experiencing. Consumers have yet to see any real improvement in their daily lives, and economic growth means little when people are drowning in debt just to afford basic needs," Roets said.

Abigail Moyo, spokesperson of the trade union UASA said that while GDP growth was slightly weaker than expected, it showed economic growth across industries and various sectors.

"Backed by the recently reported decline in the unemployment rate, UASA welcomes the recorded progress in the country’s GDP and the employment crisis.

Following a few recorded economic recovery indicators, including a decline in the unemployment rate, an inflation rate within the SA Reserve Bank target band of 3-6%, GDP growth, and now an expected decrease in the fuel price from midnight, UASA believes that with proper turnaround strategies, the economy can recover. We hope the National Budget Speech, which Minister of Finance Enoch Godongwana is expected to deliver next week, will bring about viable solutions and well-thought-out, workable plans for the economic year," Moyo said. 

"Commuting is a daily activity for most workers and learners, making the impact of fuel prices a crucial financial consideration for those who have to spend more at the pumps. UASA urges the government to look into the financial needs of South Africans by implementing strategies that do not financially cripple workers," Moyo further added. 

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