Brace for more petrol price hikes next week

Petrol price

South Africans should expect another petrol and diesel price hike next week, with both fuels potentially increasing by over R1 per litre. 

Month-end data from the Central Energy Fund (CEF) shows that petrol and diesel prices are expected to rise by around R1.20 per litre. 

These increases will come after a significant increase in fuel prices in February. Petrol prices increased by 75 cents per litre across both grades, and the price of diesel rose by between 70 cents and 73 cents per litre.

The oil price rebounded at the beginning of February, largely due to geopolitical tension and the conflict in the Middle East. It has disrupted ocean freight, including oil exports. 

The weaker rand has also played its part in pushing the under-recovery higher by trading at over R19.00 to the US dollar.

The currency’s weakness is tied to a stronger dollar as markets anticipate the US Fed will take its time cutting interest rates, keeping the dollar strong. 

This dealt a blow to emerging market currencies, including the rand.

This has resulted in the Central Energy Fund data indicating the potential increases below:

  • Petrol 93 – increase of 114 cents per litre
  • Petrol 95 – increase of 119 cents per litre
  • Diesel 0.05% (wholesale) – increase of 110 cents per litre
  • Diesel 0.005% (wholesale) – increase of 123 cents per litre

Before the increases in February and those looming in March, petrol prices have risen 54% in the past two years. 

This has resulted in spending on fuel taking up an increasing portion of South Africans’ total spending, limiting their ability to purchase other goods and services. 

Spending on petrol rose to over 8% as a share of total spending by South Africans since the end of the pandemic-era lockdowns. 

Source: Goolam Ballim, Standard Bank

Road Freight Association (RFA) CEO Gavin Kelly said that, given the high fuel cost, logistics companies would have to increase their pricing to cover the rising costs. 

This will feed into the entire value chain as fuel is a universal input into the economy, potentially raising the cost base of all goods and services. 

“Any gains achieved in mid-2023 are steadily being eroded,” he said. “Whilst we have seen fuels coming off the huge highs in 2022 and 2023, prices are not where the local economy would like them to be.”

Kelly said roughly 85% of all goods moved through and around the country are transported via road at some point. 

Thus, rising fuel prices will result in increased prices for consumers as the cost of transporting goods rises.

“Fuel is fast crossing the 50% mark in daily transport operating costs, which remains a high operational input cost for any company or business that requires goods to be transported.”

“That cost will – in most cases – be borne by the consumer who will continue to feel inflationary price pressure in the short- to medium-term.”

The freight CEO said that, in the short term, general transport costs would rise – from food to fuel, clothing, electronic goods and everything in between.

“There will be the inevitable price escalations – some immediately, but more so, a domino effect will ensue, the next in a long line of such domino effects that we have seen too often in the last few months.”