Johannesburg - At midnight drivers will have to pay a record price for their petrol – R13.96 a litre – as the rand tumbles and economists warn of tough times ahead.
The AA yesterday predicted the petrol price could reach R16 a litre of 95-octane if the rand continued its decline against the dollar.
A national petrol and diesel increase of 39c and 24c a litre respectively at midnight means this is a record price motorists in South Africa will have to pay at the pumps for their fuel.
On December 27, a dollar cost R10.35, but by January 27 it cost R11.20.
Meanwhile, international petroleum prices have ticked up slightly since the AA’s previous review of fuel price trends in mid-January, so it’s a double whammy for motorists, the AA said in a statement.
Motorists are already paying a record price for petrol at R13.57 a litre of 95-octane unleaded petrol before tomorrow’s hike, 2c higher than the previous record of R13.55 which started in August last year.
“R15, I think, is very likely, R16 will come but not now (in the near future),” said Mike Schussler, the director of economists.co.za.
He said motorists should expect about another 20c increase in the next two months.
The rand hit five-year lows against the dollar at R11.38 and against the euro at R15.50 last week, which was one of the major causes of the petrol hike.
“One cent was for the oil price; the other 38c, basically put, was the actual price of the rand,” Schussler said. “Many markets are seeing a decrease; we are seeing an increase in petrol price.”
Dawie Roodt, chief economist at Efficient Group, said this was going to be a tough year for consumers, especially those in Gauteng.
“With the e-tolls, the number of petrol price increases and we know we are going to see an electricity increase – under these circumstances I’m afraid we are going to see a substantial deceleration in consumption expenditure,” he said.
“That has been the saving grace of the South African economy – the consumer has been keeping the South African economy afloat.”
He said this was not necessarily a major concern in the long run as a period of austerity could create a foundation for future economic growth.
“But we’re going to have to tighten our belts until at least the second half of next year, then we can start to loosen again,” Roodt said.
SA Reserve Bank Governor Gill Marcus said the weak rand exchange rate affected the petrol price, which in December and January increased by an accumulative 55c a litre.
The AA expressed concern that last year’s credit data showed that almost half of credit-active consumers had an “impaired” credit record.
“We believe it will be very difficult for such people to absorb the effects of ongoing fuel price increases,” the AA said.
But it is not just the consumers who are going to feel the pinch – petrol stations themselves are negatively affected by petrol price increases.
MC Lamprecht, chairman of the SA Petroleum Retailers Association, said that they noticed a decrease in consumption during petrol price peaks, adding that it was a misconception that they profited from price hikes.
“We have a fixed cents-per-litre margin, whether the petrol price is R5 (per litre) or R15.”
He said this margin was R1.39 and that escalating operating costs and inflation meant the petrol price would negatively affect retailers. - The Star