Efficient Group founder and chief economist Dawie Roodt said South Africans should expect an increase in the price of petrol and diesel because of higher taxes.
On Wednesday, the petrol price was cut by R2.06 per litre while diesel price decreased by R2.81 and R2.69 per litre from 50ppm and 500ppm, respectively.
The Department of Mineral Resources and Energy said the average Brent Crude oil price decrease was behind the fuel price cuts.
Oil prices also continue to drop in response to fears of a global economic recession, which is good news for consumers.
However, Roodt warned that South Africans should not expect petrol and diesel prices to continue to decline.
“I am sure we will see an increase in the petrol price in March because the finance minister always increases the fuel levy during his February meeting,” he said.
“The increase in fuel taxes is very painful, but a tax on petrol is less damaging to the economy than an increase in company or personal income taxes.”
Apart from tax increases, the fuel price is mainly driven by the rand exchange rate and the oil price.
The oil price is significantly influenced by the conflict in Ukraine. The war negatively affects the oil supply, which drives up the price.
On the other end of the scale, global recession fears are driving the oil price lower because of lower demand.
“I expect the oil price to gradually decline because of increased supply with countries like Venezuela pumping more oil.”
Roodt added that the rand strengthened in recent weeks, which can continue, all things being equal.
The combination of a stronger rand and lower oil prices will be good news for petrol and diesel prices in South Africa in the short term.
However, the situation looks less rosy in the longer term.
“I expect the rand to come under pressure in the longer term, which will filter through to the petrol price,” Roodt said.