No relief for motorists as crude looks set to push fuel costs higher

SOUTH African consumers are set for another tough year at the pumps in 2019 after the National Treasury said it expected little relief from the surge in fuel prices, estimating the price of Brent Crude to reach $73.70 (R1 056) a barrel next year.

The government said yesterday that while inflation had eased this year, it expected it to increase in response to higher oil and administered prices.

The Treasury further said updated assumptions to its economic forecast were induced by an upward revision of oil and coal prices.

Finance Minister Tito Mboweni said the surge in the price of fuel and other expenses was making it difficult for South Africans to make headway.

“Administered prices, such as electricity and fuel, have risen. Unemployment is unacceptably high. Poor services and corruption have hit the poor the hardest,” said Mboweni.

The Treasury also flagged higher fuel and electricity prices, inflation risk related to depreciating exchange rate, and the financial position of some state-owned companies as posing risks to economic growth.

The local currency has depreciated by as much as 12.4 percent against the US dollar this year, largely due to the resurgent dollar, negative emerging market sentiment over market volatility in Turkey and Argentina, and trade wars between the US and China.