South African motorists should brace for a significant increase in the price of fuel from the beginning of May, with mid-month data from the Department of Energy so far pointing to a petrol price hike of around 55 cents a litre, while diesel costs could increase by approximately 39 c/l.

The fuel hikes will likely be the first major expense that ordinary South Africans will be faced with in the wake of SA’s recent political events and credit downgrades to junk status.

As the Automobile Association puts it: "The loss of confidence by investors, and the sovereign ratings downgrades by ratings agencies Fitch and S&P, have led to the rand slipping heavily against the US dollar, down from around R12.35 to its current position of around R13.40."

According to the AA, the rand’s weakness has so far contributed three quarters of the anticipated fuel price hike, the other quarter due to higher international oil prices.

"If the Rand had stayed on its previous upward course against the US dollar, it may have been strong enough to overcome the significant increases in international petroleum prices, resulting in a smaller increase in May," the AA added.

Debt Rescue CEO Neil Roets said the impending increase “would have an immediate impact on the prices of virtually all other goods and services because the South African economy was largely powered by diesel and all goods transported by road would reflect this increase.”

Given that there are still eight more days in the cycle that will determine May’s fuel prices (31 March to 25 April), much can still change between now and month-end. However given that the daily fuel price calculations from the DOE have shown a deficit (under-recovery) of over 70 cents for at least the past week means that so far the odds are stacked towards an even bigger price rise than the one predicted above.

IOL Motoring

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