Fuel Price Hike: No Joy Ride For South Africa As Fuel Price Hike

Fuel Price Hike: No Joy Ride For South Africa As Fuel Price Hike

Fuel Price Hike: No Joy Ride For South Africa As Fuel Price Hike

Consumers should brace themselves for another fuel price hike expected to hit the pumps next week, warned the Automobile Association of SA (AA).

Petrol is expected to rise by 30c a litre, diesel by 41c and illuminating paraffin by 37c. The price increase will take effect from Wednesday, the AA’s Layton Beard said in a statement.

These increases come barely a month after petrol increased by 67c a litre at the beginning of September, with diesel rising by 44c.

Beard said the price hikes were driven by stronger international oil prices and a weak rand.

The AA was commenting on unaudited month-end fuel price data released by the Central Energy Fund (CEF).

“The first half of September saw the rand appreciate against the US dollar, but this trend has been reversed since September 12, with the weaker currency eating into its earlier gains,” the statement read.

“The current rand trend is weaker, and we expect it to have an even bigger impact on fuel users in the medium term.

“Meanwhile, international fuel prices continued their run, having gradually climbed throughout September.

“This month’s figures show just how vulnerable South African fuel users are to stronger fuel prices and rand depreciation.”

An Eastern Cape-based economist at the Alternative Information and Development Centre, Dick Vorsland, said apart from increased transport costs, consumers should further brace themselves for increased food costs.

“Goods are transported to shops, so this will have a ripple effect on everything. Manufacturers will push their prices up to cover their costs and shop owners will transfer these increases onto the consumer.

“It is the consumer that will be hardest hit at the end of the day.”

A senior economist at the Eastern Cape Socio Economic Consultative Council (ECSECC), Kambale Kavese, said the biggest concern was how this would affect the economy.

According to Kavese, 60% of gross domestic product (GDP) was driven by household consumption.

If the disposable income of the household reduces, it will result in less money being spent, thereby affecting the GDP.

“When the economy declines, there will be less revenue collected by SARS. When government has less revenue and less income to spend on things like health, road maintenance and education, they will have to borrow money,” he said.

“Firms will start cutting jobs because of the poor economy and unemployment will rise. Increased food and transport costs are the obvious things which will increase.”

Beard predicted further hikes before the end of the year.

“With the US eyeing interest rate increases, and global oil markets remaining buoyant, our view is that further fuel price hikes are almost inevitable before year-end,” he said.

Attempts from Wednesday until yesterday to obtain the Department of Energy’s response were not successful.

Saturday Dispatch was told by the department’s chief director of communication Thandiwe Maimane that a statement would be made, but it was not issued by the time of writing.

Source – DispatchLIVE

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