FUEL PRICE: A LIGHTER BLOW FOR CONSUMERS

South African motorists can expect a lighter blow in April when it comes to petrol prices, with the latest data showing a much smaller hike on the cards than at the start of the month. Diesel users, meanwhile, can breathe a sigh of relief — with current trends pointing to a price cut at the pumps.

Mid-month data from the Central Energy Fund shows that petrol prices are showing a small under-recovery of around 10 cents per litre for April.

This is down significantly from the over one rand per litre under-recovery present at the start of the month, showing a massive swing in a positive direction.

Diesel drivers have seen the swing follow through, with the data now showing an over-recovery of around 35 cents per litre.

THE EXPECTED CHANGES

• Petrol 95: increase of 10 cents per litre.

• Diesel 0,05% (wholesale): decrease of 32 cents per litre.

• Diesel 0,005% (wholesale): decrease of 36 cents per litre.

• Illuminating paraffin: decrease of 46 cents per litre.

Domestic fuel costs are primarily governed by the rand/dollar exchange rate and international oil prices.

In South Africa, the fuel price is adjusted on the first Wednesday of every month based on these two factors.

For April, higher oil prices have been volatile and present a mixed result for fuel prices — still contributing to an under-recovery for petrol but an over-recovery in diesel.

The stronger rand, relative to February, is supporting prices.

It should also be noted that April marks the start of the new financial year for the government, where various tax hikes kick in.

While there is no hike for the general fuel levy and Road Accident Fund levy this year, various other minor taxes may impact the final fuel price for April.

While hardly in a strong position, the rand has strengthened in March to at least trade below R19 to the U.S. dollar, making a positive contribution to fuel price recoveries to the tune of 13 cents per litre.

The second front is local, where anxiety over the coming elections is less pronounced. Polling — which is indicative, not predictive of the result — shows that populist (anti-business, damaging to economic growth) parties are not gaining in the country, easing some tensions.

Global oil prices have broken out of the narrow range they have been trading in for most of the year, pushing higher to over $85 a barrel.

However, while prices are rising now, this will reflect only in future pricing with current recoveries reflecting the impact of the rangebound prices over the past month or so.