Fuel price spikes push up food and transport costs, and the Reserve Bank has already responded
A cost of living broadcast warns that without government intervention on the fuel levy, households face another interest rate hike.
Fuel price spikes have pushed up both food and transport costs, according to a cost of living broadcast on eNCA, which examined how fuel feeds into almost every good and service produced in the country.
Fuel is a major input cost across the economy. Most food is carried by trucks over long distances, and farmers need diesel to irrigate fields and bring in harvests. When fuel prices rise, those costs travel through the supply chain.
The broadcast states that the Reserve Bank raised interest rates to forestall possible secondary inflation on other goods and services, including food.
Without government intervention on fuel prices, households will suffer as inflation increases, the broadcast warns. It points to the possibility of another interest rate hike if nothing is done.
The broadcast notes that government has acted before, removing the fuel levy for a short period earlier this year. It suggests that losing revenue on the fuel levy may be easier to absorb than a spiralling inflationary impact across the economy.
Source: eNCA (YouTube), Cost of living | Households feel the pinch
