Serious fuel price blow in the offing for struggling consumers
SOUTH African motorists could see fuel prices increasing by nearly R2 per litre in June due to elevated global oil prices if the rand remains at the current weak level against the dollar.
This would be a blow for struggling consumers after the government announced in April a two-month reprieve in the form of a R1.50 decrease per litre in the general fuel levy.
FNB Agri-Business senior agricultural economist Paul Makube said yesterday that a fuel price hike would be a blow for consumers if relief measures were not implemented. Makube said farmers were facing a hefty fuel bill next month as the general fuel levy intervention lapsed.
“The R1.50c/litre will be back in the fuel calculation … considering the exchange rate depreciation of 9 percent month-on-month and 11.4 percent year-on-year so far, with crude weakening by 5.4 percent month-on-month and 59 percent year-on-year,” he said. “A further R3 a litre in fuel increases is possible in June if the relief measures are not extended or a new fuel price determination is implemented.”
The price of a litre of petrol for both 93 and 95 categories eased by 12 cents this month, but diesel rose by between 92c and 98c, while the wholesale price of paraffin increased by 79.60c per litre. The main drivers behind the price changes included the rand/dollar exchange rate as well as fluctuating oil prices.
The average Brent crude oil price decreased from $109.37 to $104.78 during the period under review, following lower demand in China, the largest importer of crude oil, due to Covid-19 restrictions.
Investec chief economist Annabel Bishop said South Africa was continuing
to see the negative effects from elevated commodity prices in general, even though they have pulled back somewhat from March highs.
“But South Africa is now in line for a R1.80/litre petrol price hike in June,” Bishop said.
“It is still early in the month and there is still time for the rand to strengthen and oil prices to calm before the fuel price change on the first Wednesday of next month.”
The expected petrol price increase
has prompted the DA to introduce a Private Member’s Bill to codify, through legislation, the deregulation of the fuel price to encourage competition between wholesalers and retailers.
DA spokesperson on mineral resources Kevin Mileham said that with the temporary tax relief of R1.50 set to expire at the end of the month, South Africans might have to pay an increase of more than R3 per litre for fuel and as much as R25 per litre of fuel from the beginning of June.
“Not only will transport prices increase, but food and other basic necessities will also become more expensive yet again. And these prices do not ebb and flow like the fuel price,” Mileham said.
“South Africans are already struggling to make ends meet and unemployment is soaring. We urge the finance minister to continue with this tax relief, and to fast-track and prioritise the review of the fuel pricing model.”