While fuel prices are still set to go up in October, they are now expected to see much smaller increases than earlier thought thanks to an unpredictable drop in international oil prices, said Gavin Kelly, CEO of the Road Freight Association (RFA), in a CapeTalk interview.
On 1 September, petrol prices in the country were expected to increase by a maximum of R1.70/litre and diesel by R2.96/litre come October.
Since then, oil prices have fallen from around $97/barrel to in the region of $94.80/barrel, consequently bringing down the anticipated price hikes for next month to a lower 86-92c/litre for petrol and R1.64-1.69/litre for diesel.
On the downside, the rand/US dollar exchange rate went from an average of R18.75/dollar at the start of the month to now sitting at R18.93/dollar.
This adverse performance has taken the rand’s contribution to the expected fuel price increases from around 5-6c/litre on 1 September, to between 22-25c/litre on the 26th, depending on the type and grade of propellant.
The silver lining
Looking at the uptrend in petrol and diesel costs throughout the year coupled with Europe’s ever-increasing dependence on fuel which is driving up demand on a global scale, the RFA expects a “tough end of the year” for consumers in terms of the prices at the pumps.
This will be exacerbated by the recent spate of floods in the Cape provinces that will see plenty of trucks standing idle whilst waiting for repairs, “and unfortunately, that uses fuel,” said Kelly.
These roads may look fine to the untrained eye, but they could have suffered severe damage under the surface and must first be inspected and if needed, repaired, before they can be deemed safe to use once more, something that the RFA believes is “not going to happen quickly.”
The silver lining is that, while October’s fuel price increases are still anticipated to be substantial, they will have a smaller effect on inflation than in previous months, said Kelly.
“Now, it’s going to have an impact on consumer’s pockets. Hopefully, it’s not going to be too bad on inflation… so the reserve bank should stand steady, but it’s going to be a tough end of the year definitely,” he said.
Keyword: Good news for petrol prices in South Africa