Good news for petrol prices next week

Despite an imminent hike to the general fuel levy, South African motorists should still see petrol and diesel prices come down next week.

Month-end data from the Central Energy Fund (CEF) shows that fuel prices are still sitting with an over-recovery that outstrips the planned hikes.

Finance Minister Enoch Godongwana announced the inflation-based tax hikes in his third budget, tabled on Wednesday, 21 May.

The increase, which only applies to the General Fuel Levy, is the first in three years, and is necessary to cover the funding gap created by getting rid of VAT increases.

The move will see the general fuel levy for petrol and diesel increase to R4.01c/l and R3.85c/l, respectively, effective from 4 June 2025.

The Road Accident Fund levy will not be changed and will remain at R2.18, while the carbon fuel tax levy will keep the same 3 cents per litre increase seen in previous budgets.

As a result, fuel taxes will be going up 15 cents per litre for diesel and 16 cents per litre for petrol.

Fortunately for motorists, the CEF’s data shows a month-end over-recovery in prices at 52 cents for diesel and 20 cents for petrol, meaning the balance is still positive.

The month-end data from the CEF shows the following projections:

• Petrol 93: decrease of 20 cents per litre
• Petrol 95: decrease of 20 cents per litre
• Diesel 0.05% (wholesale): decrease of 52 cents per litre
• Diesel 0.005% (wholesale): decrease of 52 cents per litre
• Illuminating paraffin: decrease of 56 cents per litre

Factoring in the coming fuel levy increases, this is the current projected outcome:

• Petrol 93: decrease of 4 cents per litre
• Petrol 95: decrease of 4 cents per litre
• Diesel 0.05% (wholesale): decrease of 37 cents per litre
• Diesel 0.005% (wholesale): decrease of 37 cents per litre

Note: While the latest budget includes a 3 cents per litre hike in the carbon fuel tax as well, this increase was already applied in April.

This means that, even with the coming tax increases, petrol prices should still come down by a few cents provided no other adjustments are made (such as balancing the slate levy or other price movements).

While the tax increase is a blow to road users, further reductions in fuel prices—no matter how small—will help keep inflation under control and also ease the country’s cost-of-living crisis.

The South African Reserve Bank (SARB) noted on Thursday (29 May) that lower fuel prices this year have driven inflation down below its current target range.

This has given the central bank ample room to cut interest rates by another 25 basis points this week, despite the ongoing uncertainty in global markets.

Lower fuel prices have been driven by a stronger rand against the dollar and lower global oil prices, both of which have stabilised relative to the shocks of April.

The rand has maintained its position against the dollar below the R18.00/$ mark, largely due to the dollar’s weakness rather than any wider strengthening.

Weak sentiment has driven the dollar lower, benefiting the rand. However, the local unit has generally weakened against other major currencies.

On the oil front, global markets have fluctuated amid the wider tariff chaos and the expected impact on supply and demand.

Overall, oil is trading much lower in 2025 so far, having weakened around 15% since the start of the year. In more recent sessions, prices have come under pressure as markets anticipate a glut in supply.

As uncertainties persist, more pricing volatility is expected.

While the stronger rand is contributing to an overrecovery in local pricing for petrol and diesel, the price movement for oil is only benefitting diesel (causing an underrecovery for petrol).

Despite this, on balance, both petrol and diesel should still see cuts next week.

The Department of Petroleum and Mineral Resources will announce the official adjustments before they take effect on Wednesday, 4 June.