R4 per litre petrol price blow to South Africa
Petrol and diesel prices are driving up inflation in South Africa, with prices now R4.20 and R5.40 per litre higher than a year ago.
While a July price cut led to a drop in headline inflation for the month, hikes in August and September are expected to push the figure up again.
Stats SA’s latest inflation print for July 2026 showed headline CPI at 4.3% y/y, down from 5.0% in June.
The drop was largely due to a R1.96-per-litre cut in petrol prices that month, while diesel prices were cut by R3.59 per litre.
This cut contributed to a 0.4 percentage point drop in the headline inflation print for the month.
However, Investec Chief Economist Annabel Bishop noted that fuel prices in July this year were still R4.23/litre higher for petrol and R5.40/litre higher for diesel than in July 2025.
“Fuel price inflation is now at 20.6% year-on-year,” she said. “Without fuel prices, CPI Inflation would be 3.7% year-on-year.”
This is notable, as even at a lower 4.3% y/y, headline inflation is still running outside the South African Reserve Bank’s new 3% target and the one-percentage-point flexibility band (i.e., 4%).
This has put the South African Reserve Bank (SARB) on the back foot, having reversed course from an interest-rate-cutting path to a hiking path.
The central bank hiked interest rates by 25 basis points in March, holding rates in May and July. Markets are still pricing in further rate hikes, with at least 25 bps anticipated by year-end.
Adding to this bleak picture, fuel prices have worsened significantly since July, meaning inflationary pressure is likely to continue.
In August, a balancing of the slate levy pushed petrol prices from a flat rate to a 52-cent-per-litre cut. Diesel, however, increased by R1.23 per litre.
At current recovery levels, the Central Energy Fund’s (CEF) data show that an 85-cent-per-litre and R3-per-litre hikes are building for petrol and diesel in September.
These are the current recovery levels:
- Petrol 93: increase of R0.74 per litre
- Petrol 95: increase of R0.85 per litre
- Diesel 0.05% (wholesale): increase of R2.80 per litre
- Diesel 0.005% (wholesale): increase of R2.99 per litre
- Illuminating paraffin: increase of R2.20 per litre
Bishop said that the looming hike in petrol prices for September will end up “cancelling August’s cut out” and will likely push headline inflation back up to 5.0%.
Fuel prices are still volatile
Adding to the woes, “fuel prices remain volatile,” Bishop said.
The direction of local fuel prices is tied to the ongoing war in the Middle East and its impact on global oil markets.
“The Brent crude oil price has risen to $91.50 a barrel and averages $86.40 a barrel this month to date,” Bishop said.
This is up sharply from the $70-a-barrel levels reached before peace talks between the US and Iran collapsed in mid-July.
The oil price is rising as attacks on vessels in the Strait of Hormuz resumed, with threats from Iran to keep the Strait closed until the United States meets its terms.
Visible traffic through the narrow waterway has slowed to a trickle as the threat of attacks from Iran remains high. Tankers have u-turned to avoid being attacked.
The risks to shipping are set to continue after US President Donald Trump insisted that there were no ongoing talks with Iran, leaving the simmering conflict in the Middle East in limbo.
Iran’s lead negotiator with the US also said Hormuz won’t reopen until Washington agrees to a list of measures, including lifting its naval blockade, removing oil sanctions and ending military operations.
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