{"id":773669,"date":"2024-05-26T16:00:00","date_gmt":"2024-05-26T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=773669"},"modified":"2024-05-24T14:51:44","modified_gmt":"2024-05-24T12:51:44","slug":"petrol-price-shock-for-south-african-motorists","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/773669\/petrol-price-shock-for-south-african-motorists\/","title":{"rendered":"Petrol price shock for South African motorists"},"content":{"rendered":"\n

The price of unleaded 93 petrol increased by 119% over the last four years, with similar increases for unleaded 95 petrol and diesel.<\/p>\n\n\n\n

These significant fuel price increases have caused tremendous pain to South African motorists already struggling with high interest rates and rising food prices.<\/p>\n\n\n\n

An analysis by BusinessTech revealed that the price for unleaded 93 petrol increased from R11.51 per litre in May 2020 to R25.15 in May 2024.<\/p>\n\n\n\n

The price of unleaded 95 petrol increased from R12.22 in May 2020 to R25.49 in May 2024, while diesel increased from R11.19 per litre to R22.24 over the same period.<\/p>\n\n\n\n

This means South Africans pay over 100% more for fuel now than they did four years ago. However, the price hikes do not only hurt motorists.<\/p>\n\n\n\n

In South Africa, most products are carried by road. Transnet\u2019s collapse aggravates the situation by pushing mining companies to use road freight instead of trains.<\/p>\n\n\n\n

The higher petrol and diesel prices force logistics companies to increase their pricing to cover the rising costs.<\/p>\n\n\n\n

The higher transport costs feed into the entire value chain as fuel is a universal economic input, potentially raising the cost base of all goods and services.<\/p>\n\n\n\n

Road Freight Association (RFA) CEO Gavin Kelly said roughly 85% of all goods moved through and around the country are transported via road at some point.<\/p>\n\n\n\n

Fuel contributes over 50% of the transport costs associated with road freight. Therefore, higher fuel prices translate into higher operational costs for transport companies.<\/p>\n\n\n\n

The higher transport costs are passed on to consumers in the form of higher prices at the till. This applies to nearly all products, from food to electronics.<\/p>\n\n\n\n

Higher product prices translate into higher inflation, eroding consumers’ salaries’ buying power.<\/p>\n\n\n\n

Higher inflation also caused the South African Reserve Bank to increase interest rates, putting further pressure on consumers through higher debt repayments.<\/p>\n\n\n\n

Higher inflation can also cause interest rates to stay higher for longer. South African Reserve Bank Governor Lesetja Kganyago said there would be no interest-rate cuts until inflation is brought under control.<\/p>\n\n\n\n

\u201cRates are where they are because inflation is what it is,\u201d Kganyago said in an interview with Bloomberg in Sao Paulo last month.<\/p>\n\n\n\n

\u201cThe task of taming inflation is not yet done. Until that is done, I don\u2019t see why there should be a change in the monetary stance.\u201d<\/p>\n\n\n\n

Higher petrol and diesel prices are, therefore, bad news for those looking for interest rate cuts in the short term.<\/p>\n\n\n\n

The combination of high fuel prices, high inflation, and high interest rates is devastating for South African consumers who are struggling to make ends meet.<\/p>\n\n\n\n

It raises the question of whether the government can intervene to lower fuel prices, helping struggling consumers and bolstering the economy.<\/p>\n\n\n\n

However, this is not easy. The high petrol and diesel prices are linked to the international oil price, the rand\u2019s exchange rate, and fuel taxes.<\/p>\n\n\n\n

The government has little control over the oil price or the rand\/US dollar exchange rate. Lowering fuel taxes will also be risky.<\/p>\n\n\n\n

The fuel levy, an excise tax charged on petroleum products such as petrol, diesel, and biodiesel, is an important source of revenue for the government.<\/p>\n\n\n\n

The fuel levy generated R93.37 billion in revenue in the 2023\/24 financial year. It makes up around 5% of the government’s total tax revenue.<\/p>\n\n\n\n

In the 2024 Budget, South African motorists were given some relief when the general fuel levy and the Road Accident Fund (RAF) levy were not increased.<\/p>\n\n\n\n

However, this is about as much as the government can do without hurting tax revenue and creating an even bigger budget deficit.<\/p>\n\n\n\n

Fuel price increases from May 2020 to May 2024<\/strong><\/h2>\n\n\n\n

The charts below show the petrol and diesel price increases over the last four years.<\/p>\n\n\n\n

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South African motorists have endured tremendous pain at the pumps with large petrol and diesel price increases.<\/p>\n","protected":false},"author":10,"featured_media":708898,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[19909,19910,2171,16978,4043],"class_list":["post-773669","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-diesel-price","tag-gavin-kelly","tag-petrol-price","tag-road-freight-association","tag-south-african-reserve-bank"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773669","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=773669"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773669\/revisions"}],"predecessor-version":[{"id":773673,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773669\/revisions\/773673"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/708898"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=773669"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=773669"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=773669"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}