Significant fuel price increases in August will have a knock-on effect on prices across a number of major sectors, says the Automobile Association (AA), adding even more pressure to consumers who are already struggling to make ends meet.
The Department of Mineral Resources and Energy announced a 91 cents per litre increase for petrol and a 55-56 cents per litre increase for diesel over the weekend. These changes will come into effect on Wednesday (4 August).
The AA’s Layton Beard said that for the first time in history, motorists will be paying more than R18 for a litre of petrol at inland stations. Beard told 702 that South Africa already reached record-high price points for petrol in April this year, with the latest increase another hammer blow.
“That is certainly a huge cause for concern – not just for motorists but all consumers. Everything is going to get more expensive,” he said.
“We are definitely seeing that the taxes being added by the government are paying a significant role, but in terms of the increase for August the department of mineral resources and energy said that 48 cents was a result of international petrol price increases and 43 cents was a result of the rand/dollar exchange rate.”
However, Beard said that there was definitely some ‘wriggle room’ in the petrol price – particularly in the 40% of the price which comprises various taxes. He said the government should review these to mitigate the impact of the recent increases.
This was echoed by independent economist Ndumiso Hadebe, who said that South Africa’s most recent inflation data shows that the biggest drivers are fuel and food prices.
He said that wages have not increased sufficiently to make up for these additional costs and that the government will need to do some ‘creative fiscal work’ to ensure that these hikes do not stymy the country’s Covid-19 recovery.
In the long run, he said that the government needs to address some of the issues impacting the ‘competitiveness’ of South Africa’s economy, which will improve labour absorption and create ‘a bigger pie for all’.
“Unfortunately at this rate, it becomes very difficult for an economy the size of ours to continually absorb the costs in an inflationary sense.”
Petrol price increases
In addition to the globally high oil prices and weakening rand, the Department of Mineral Resources and Energy said that the latest increase will include a ‘slate levy’, which will have to be implemented into the price structures of petrol and diesel.
The department said the following price hikes, will come into effect on Wednesday (4 August):
- Petrol 95: increase of 91 cents per litre;
- Petrol 93: increase of 91 cents per litre;
- Diesel 0.05%: increase of 56 cents per litre;
- Diesel 0.005%: increase of 55 cents per litre;
- Illuminating Paraffin: increase of 50 cents per litre;
|Fuel (Inland)||July official||August official|
|0.05% Diesel (wholesale)||R15.08||R15.63|
|0.005% Diesel (wholesale)||R15.12||R15.66|