Cape Times

Interest rates on hold but petrol to go up

- ASHLEY LECHMAN ashley.lechman@inl.co.za

WHILE the South African Reserve Bank kept interest rates on hold last week, consumers will suffer another blow as petrol prices are set to rise this week.

The Department of Mineral Resources and Energy (DMRE) announced the fuel price adjustment­s on Thursday.

Diesel users, however, will gain some reprieve after the DMRE said prices would be coming down.

For petrol, the 93 ULP and LRP grades will increase by 65 cents per litre, while the 95 ULP and LRP grades will increase by 67 cents per litre.

Diesel 0.05% sulphur will also see an increase of R3.22 cents per litre, while the grade of diesel 0.005% will decrease by R1.78 cents per litre.

Illuminati­ng paraffin will also decrease, by 29 cents per litre.

The DMRE further announced that SMNRP for IP would decrease by 58 cents per litre and the maximum price for LP gas would decrease by 19 cents per kg.

The price adjustment­s will come into effect tomorrow.

The AA, before the official adjustment announceme­nt, said the diesel price decrease was welcome news for the economy.

“Diesel is a big input cost in major sectors such as agricultur­e, mining, manufactur­ing and retailing, and an increase here often contribute­s to increased prices of basic commoditie­s,” the AA said.

South Africa’s fuel prices are adjusted monthly, informed by internatio­nal and local factors.

Internatio­nal factors include the fact that South Africa imports crude oil and finished products at a price set at the internatio­nal level, including importatio­n costs such as shipping costs.

On oil prices, the DMRE said: “The average Brent Crude oil price increased from $82.50 (R1 535) to $84.22 per barrel, during the period under review. There was a lot of volatility in the market this period. The main contributi­ng factors is the continued OPEC+ production cuts and the attacks on the Russian refineries by Ukraine, which could pose a supply risk.”

The local currency, the rand, appreciate­d, on average, against the US Dollar (from R19.20 to R18.04 per dollar) during the period under review when compared to the previous one.

“This led to lower contributi­ons to the Basic Fuel Prices of all products by over 10.00 cents per litre,” the DMRE said.

Annabel Bishop, Investec’s chief economist, said in a note: “Energy prices have picked up year to date, supported by Opec+ quota tightening, but other commoditie­s prices are mixed, leading to uninspirin­g support for commodity currencies, although some strength in these exchange rates in the second half of the year is likely.”

She said the economic outlook for South Africa looked slightly brighter.

“Constraint­s remain at the ports, rail networks and power production are expected to be worked down over the next few years, increasing SA’s export capacity as commodity prices strengthen longer-term, supporting the rand,” Bishop said.

With more than half (55%) of the country’s citizens able to cover costs for only food, shelter and the basics, this begs the question: Will South Africans be able to hang on and hang in until the government finally decides to cut the repo rate?

Neil Roets, the CEO of Debt Rescue, said that aside from the relentless costof-living increases, the pressure on the disposable income of working South Africans was the biggest red flag as take-home pay failed to keep up with inflation.

“The only way to turn this around is to lower inflation which, in turn, will lower interest rates. Surely the plight of the country’s workers and their families should be foremost when making decisions,” he said.

 ?? ?? CAPE Town Spurs FC was crowned 2024 Bayhill Premier Cup Tournament champions yesterday, after beating FN Rangers St Agnes 4-1 in the final at Athlone Stadium. The trophy presentati­on capped six days of football that saw 32 teams go head to head in the under-19 soccer tournament. | AYANDA NDAMANE Independen­t Newspapers
CAPE Town Spurs FC was crowned 2024 Bayhill Premier Cup Tournament champions yesterday, after beating FN Rangers St Agnes 4-1 in the final at Athlone Stadium. The trophy presentati­on capped six days of football that saw 32 teams go head to head in the under-19 soccer tournament. | AYANDA NDAMANE Independen­t Newspapers

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