Fuel price looks set to rise in May – AA

DATA from the Central Energy Fund indicates that the price of fuel will increase again, by 37c or 38c per litre, in May, the AA says.

AA spokesperson Layton Beard said local fuel prices had reached recordhigh increases over the past three years despite the government not increasing the general fuel levy or Road Accident Fund levy.

“Central Energy Fund (CEF) data indicates that unleaded 93 petrol inland in May 2022 cost R21.51 per litre but increased to R23.01 in May 2023. According to current data from the CEF, this price will increase by 37c/litre, in May, pushing the price close to R25.15/ litre.”

Beard said the outlook for unleaded 95 inland was not much better, with the CEF data showing an increase of 38c/litre.

“This will push the price to around R25.50/litre, higher than that R25.42 seen in August 2022, but not quite the record price of R26.74 in July that year.

“Despite this bad news, diesel is set to decrease by 35c/litre, while illuminating paraffin is also set to come down by 28c/ litre.”

Beard said the drop in diesel prices was welcome as it would not result in higher input costs across various sectors. That, in turn, would not be a driving factor in consumer prices increasing.

He said a review of the data showed that the expected increases in the cycle were a result of fluctuations in international product prices that had taken a sharp upward trajectory at the beginning of the month.

“The relative stability of the rand against the US dollar in the early part of the month is contributing only a small margin to the expected increases.”

With tension increasing in the Middle East, the local currency could be under significant pressure in the last two weeks of April and have a more significant impact on local fuel prices in May, Beard said.

He added that the expected increases reaffirmed the AA’s belief that a review of the fuel price structure was necessary in order to establish if any components within the pricing model could be revised to mitigate against rising costs.

Dr Ntokozo Nzimande, a senior lecturer in the economics department at UCT, said many factors affected the fuel price.

“Fuel prices are likely to react to the fears of a war in the Middle East. The uncertainty in the country due to the impending elections has impacted the rand. But between now and May is a long time; anything can still happen.

“I think petrol prices will likely react if the situation gets tense and the rand continues to dip.”