Unaudited fuel price data from the Central Energy Fund indicates that petrol prices in South Africa are likely to push past R23 per litre in May, marking the first time this level will be touched this year.
“The expected increases will add further pressure on embattled consumers grappling with food inflation which hit record highs in the first quarter of 2023,” said the Automobile Association (AA) about the latest projections.
There is a silver lining, however, as diesel prices are set to drop by a noticeable amount, with a maximum decrease of 57 cents per litre on the cards as of 25 May.
“Diesel is a big input cost in major sectors such as agriculture, mining, and manufacturing and an increase here often contributes to increased prices of basic commodities,” said the AA.
“The current increase in the consumer price index (cpi) to 7.1% in March and food inflation hitting a 14-year high of 14.4%, plus an increase in diesel prices would have resulted in very unfavourable conditions for consumers.”
According to the CEF’s latest numbers, the expected fuel price changes taking effect in May are as follows:
- Petrol 93 – Increase of 56 cents a litre
- Petrol 95 – Increase of 52 cents a litre
- Diesel 0.05% – Decrease of 31 cents a litre
- Diesel 0.005% – Decrease of 57 cents a litre
Keep in mind that these are not the official changes coming into effect next month, but rather preliminary projections based on exchange rate and international oil prices over the course of April.
The Department of Mineral Resources and Energy will gazette the final adjustments before 3 May, which will account for potential alterations in margins, levies, or zone differentials.
What affects South African fuel prices
The consistently-high international petrol product prices over the course of April are the biggest reason behind the anticipated petrol price hikes for May.
Globally, this fuel type was on average trading higher for the majority of April than it did in May, contributing to an under-recovery, i.e. price increase, of roughly 68c/litre to petrol 93 and 65c/litre to petrol 95.
In contrast, the international cost of diesel drop noticeable over the course of April, resulting in an over-recovery, i.e. price decrease, of 46c/litre for diesel 0.05% and 20c/litre for diesel 0.005%.
The average rand/US dollar exchange rate also brought welcome contributions to the expected fuel price changes in May.
On 31 March, the rand on average traded around R17.80 to the dollar, moving up to R18.21 per dollar by 25 April, however, this is still lower than the R18.30/dollar that it sat at for most of the preceding month.
This resulted in an over-recovery of between 11-12c/litre for all grades of both petrol and diesel.
Keyword: Petrol prices in May looking to pass R23 for the first time this year