JOHANNESBURG - The fuel price will increase by between 23 cents and 27 cents a litre tomorrow.
This means that a litre of 95ULP will cost R16.02 a litre. This is the highest price that the consumer has ever had to pay. It is also the fourth consecutive month of increase.
The price for 95 ULP petrol (Gauteng) is now 226c, or more than 16 percent higher than at the beginning of March. A year ago, motorists in Gauteng paid a mere R12.86 a litre.
In January 2012, the price was R10.61 or R5.45 cheaper. Diesel consumers in Gauteng will pay R14.44 a litre, or R3.47 more than a year ago.
This imposes a huge increase in input costs for agriculture either to harvest the current crop and to plant the coming summer crop, as well as the effect on the Western Cape winter crops. The reasons for the petrol price increase vary, but are mostly due to the sharp increase in the international oil price and to a lesser extent the depreciation of the rand.
The average Brent oil price during June 2017 was $46 (R630.22) a barrel compared to $75.94 last month. Over the year, the rand has depreciated from R13.06 against the dollar in June last year to a close of R13.76/$ on Friday.
This is a depreciation of 5.5 percent. Fuel price increases will continue to have severe negative effects on the economy and the man in the street.
Its contribution to the inflation basket is 4.58 percent, which means the 28 percent increase over the last year would have contributed to an increase of 1.2 percent to inflation. According to Statistics South Africa transport contributed 0.3 percent to monthly inflation increase rate during April and 0.2 percent in May. The increases not only put pressure on private transport, but on public transport as taxis and buses pass on the hike to users.
This is likely to impose social and other negative effects on the consumers. This year’s fuel levy was increased by 52c a litre. Finance Minister Nhlanhla Nene will have to be very careful in increasing it again next year. This may impose a serious threat to the national government to address his current deficit and to find the extra at least R30 billion to pay for civil servants’ salary increases and or to finance the state-owned enterprises.
- BUSINESS REPORT