'South Africans must prepare for higher cost of living'

Experts say with price hikes expected from next month, South Africans should brace themselves.

FILE: Experts say with tax increases expected in April, consumers must be ready for a hike in the cost of living. Picture: EWN.

JOHANNESBURG - South Africans have been warned to brace themselves for an increase in the cost of living, with hefty fuel price hikes expected from next month.

During his budget speech in February, Finance Minister Nhlanhla Nene announced an increase in personal tax, fuel levies and sin taxes.

Analysts are now predicting fuel prices will increase by as much as R2 a litre from April.

Economist Chris Hart says he doesn't expect much relief beyond April.

"Especially if the rand doesn't cooperate. The rand is continuing to weaken, we've got a deficit with the rest of the world and that's likely to keep the rand under pressure for some time."

Chief Economist and Global Head of Research at Standard Bank Goolam Ballim agrees.

"The petrol price decline between August of last year and January of this year will have proven only temporary and provided a bit of summer joy, but all of that is fast fizzling away."

INCREASE IN PERSONAL TAX

Nene's first Budget Speech painted a bleak picture of the state of the country's finances and he insisted that a raise in taxes could no longer be postponed.

"Today's budget is constrained by the need to consolidate our public finances, in the context of slower growth and rising debt."

Nene said that the one percent tax hike to be imposed on salaries of just under R182,000 a year was small, and an effort to limit more damage to the economy.

Pensions and social grants will increase by between R30 and R60 and there's some tax relief for small businesses.

Finance minister raised personal income tax for the first time in 20 years.

INCREASE IN SIN TAX

The minister also delivered some bad news for alcohol drinkers and cigarette smokers.

As of 1 April 2015, the following increases will be implemented:

  • A quart of beer is going up by 15,5 cents.

  • A bottle of wine will cost 15 cents more.

  • Sparkling wine lovers will fork out an extra 48 cents per bottle.

  • Whisky tipplers will pay R3,77 more per bottle.

  • Smokers will be burning up an extra 82 cents for every pack they consume.

Budget 2015 in a nutshell