South Africa motorists can expect yet another petrol price hike in June if the rand continues its weaker trend.
According to senior researcher at Solidarity, Paul Joubert, the average level of the exchange rate of the rand against the dollar has been slightly weaker so far in May than the average of R14.65 in April.
Monday’s sharp depreciation put the average for May at R14.87.
“If these weak levels are sustained through the rest of May, it will have a significant impact on petrol and diesel prices,” said Joubert.
He noted that international dollar prices of refined petrol and diesel (not crude oil), have both traded at significantly higher prices in May so far, when compared with the prior month.
“These two factors together, if sustained at current levels, will lead to the price of all grades of petrol increasing by about 47 cents per litre on 1 June, while the wholesale price of diesel will likely increase by about 68 cents per litre,” the analyst said.
This would put the retail price of 93 octane petrol in Gauteng at R12.91 per litre – still 1.3% lower than it was in June 2015.
The wholesale price of diesel with 0,05% sulphur in Gauteng would cost about R11.21 per litre, which would be nearly 4% lower than it was in June 2015, Joubert said.
The analyst pointed out that the price of petrol has been lower than the same month of the preceding year for the last 18 months – with January to March 2016 as the only exceptions.
“This situation may change in the latter half of 2016, which would stoke Consumer Price Inflation upward again,” Joubert said.