The Automobile Association of South Africa forecasts another petrol price increase in September after another period of rand weakness.
Based on the current data, petrol is showing an increase of up to ten cents a litre, illuminating paraffin 12 cents, and diesel as much as 16 cents, the group said.
“International oil prices have dropped markedly since the beginning of the month, with crude oil having consistently traded below 60 US dollars per barrel. In recent days though, there have been signs of an uptick, which could see fuel prices come under renewed pressure,” it said.
“However, the rand plummeted over the same period after trading within a consistently narrow band since June. This has turned a likely fuel price reduction into an across-the-board increase.”
Should this mid-month forecast hold, motorists can expect to pay R16.02 for 95 petrol and R15.70 and 93 petrol.
This equates to an increase of just over R2 a litre of 95 petrol since the start of the year for petrol and an increase of R1.91 for 93 petrol.
Diesel will have increased by R1.35 since January.
|Month||95 Petrol||93 Petrol||0.05% Diesel (wholesale)|
While the oil price has fluctuated since the start of 2019 – and was directly responsible for some monthly hikes – it is South Africa’s weaker rand which has caused the most damage.
The currency hit its lowest level since September 2018 last week, with weak data, worries about the impact on the economy of heavily indebted state-owned energy firm Eskom and negative commentary from credit rating agencies piling pressure on the currency.
“The long-term objective is still the 2016 highs of R17.90 but the more immediate target will be the 2018 highs of R15.69,” Standard Bank’s chief trader Warrick Butler said in a note on Monday (12 August).
“Volatility has of course picked up massively over the last three weeks and the rand is now officially the worst-performing currency globally since this mess started in the middle of July.”
The AA added that the worst may still be coming.
“The South African economy is in a parlous state, with ongoing policy uncertainty and a growing debt burden,” it said.
“The country is ill-placed to weather its domestic challenges, let alone developments on the international front, and this leaves fuel users increasingly exposed to movements in the rand.”