Possible fuel increase breather in August

Even though a decrease in fuel prices is expected, South Africans will still have to pay high prices for petrol and diesel.

South Africans can expect some relief at the pumps in August based on current unaudited mid-month data from the Central Energy Fund, according to the Automobile Association (AA).

“All of this is naturally good news for consumers and motorists and will ease some pressure on embattled budgets. We must, however, be cognisant of the fact that this is mid-month data, and that the price outlook may change over the next two weeks before the August adjustment is made,” said the association.

According to the data, the drop in international petroleum prices is driving the decreases, but they are being offset by a weaker rand/US dollar exchange rate, which is eroding otherwise sharply declining fuel prices.

These decreases will be further limited due to the return of 75c/L to the General Fuel Levy (GFL). The government has indicated that it will not alter its position that the initial R1.50 it cut from the GFL in April and May, and which was halved to 75c for June and July, will end in August. This means the GFL returns to its normal rate of R3.93/L in August.

“Given this, and based on the current data, the decreases to the prices for petrol and diesel are expected to be around 15c/L and 32c/L. Although these would be more significant if the GFL relief was still in play, a reduction is nonetheless welcome, and will ease some pressure on consumers,” the AA noted.

The association said that despite the forecast decreases, fuel prices in South Africa remain high and that the previous sizable increases will still impact the economy in the coming months.

“Decreases offer immediate relief, but increases filter into the economy over time, especially as those sectors affected by them don’t immediately adjust their prices downward, but instead wait for more consistent fuel cuts that lower their input costs. We stand by our call that a review of the fuel price structure and an audit of the components that comprise the fuel price, is essential and long overdue to offer sustainable solutions that mitigate against rising fuel costs in the country,” concluded the AA.

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