Big petrol and diesel price increases announced

The Department of Mineral Resources and Energy has announced large petrol and diesel price increases, which will kick in on Wednesday.

The price of Petrol 93 will increase by R1.08 per litre, while the price of Petrol 95 will increase by R1.14 per litre.

The price of Diesel 0.05% Sulphur will increase by R1.97 per litre, and the price of Diesel 0.005% Sulphur will increase by R1.94.

Illuminating paraffin will cost R1.51 more, and the price of LPGas will increase by R2.50 per kilogram.

The department explained that the international product prices for petrol, diesel and illuminating paraffin increased during the period under review.

The rand also depreciated against the US dollar during the period under review, on average, compared to the previous period.

The average ZAR/US dollar exchange rate from 1 September 2023 to 28 September 2023 was 18.9853 compared to 18.6731 during the previous period.

This led to a higher contribution to the basic fuel prices of petrol, diesel, and illuminating paraffin by 24.17, 26.63, and 26.59 cents per litre, respectively.

Renowned economist Dawie Roodt said the higher fuel prices pose a risk to inflation as it affects most economic sectors.

The fuel price is a major driver of inflation through transport costs and as a universal input in the production of goods. 

Fuel price inflation can also drive wage inflation by increasing the cost of basic goods and services. 

FNB senior economist Koketso Mano said the weak rand and higher international oil prices resulted in a sizeable fuel price hike in September.

This will shift fuel prices back into inflationary territory after recording annual deflation in the past three months.

So, while inflation remains in the South African Reserve Bank’s (SARB’s) target range of 3% to 6%, there are upside risks which should be considered.

South African Reserve Bank economists Zaakirah Ismail and Christopher Wood said a 10c per litre fuel price increase costs the economy over R1 billion per year.

The economists warned that even short-term fuel price spikes could trigger stubborn inflation through wage and price increases.