Consumers in South Africa will once again be left scrambling to readjust their monthly budgets to contend with a fourth consecutive month of fuel price increases.
This comes after the Department of Energy and Mineral Resources (DMRE) announced the official fuel prices for the month of October yesterday.
The DMRE said that petrol would increase by between R1.08 (for 93 Unleaded) and R1.14 (95 Unleaded) from Wednesday, October 04, while diesel prices would go up by between R1.93 (low-sulphur 50ppm) and R1.96 (500ppm).
This means that a litre of 95 Unleaded will now cost motorists R24.96 at the coast and R25.68 in the inland regions, while 93 Unleaded will rise to R25.22.
The diesel increases will see the wholesale price of 50ppm rise to R24.51 at the coast and R25.22 inland, while 500ppm will cost R24.29 and R25.01, respectively.
Annabel Bishop, chief economist at Investec, said that the higher fuel prices will see inflation in the country increase further.
Bishop said, “Higher fuel price increases in September and October will see inflation climb further, from 4.8% y/y in August to potentially above 5.0% y/y in September, with base effects having the potential to push it towards 5.5% y/y by year-end.
“Fuel and food prices tend to be the largest movers of CPI inflation in SA on a regular basis, with CPI inflation the measure that the South Africa Reserve Bank (SARB) targets in a 3-6% y/y range, but prefers inflation to average near the midpoint of 4.5% y/y.”
The fuel price increases, further compounded by load shedding imposed by the ailing state power utility, Eskom, have elevated the costs of doing business in the country as well as pushed consumer prices up, along with elevated interest rates, have created a cost of living crisis for South Africans.
One of the country’s biggest retailers, Pick n Pay’s share price dropped by more than 13% on the JSE earlier this week following the retailer’s posting that it expects to report a loss.
Pick n Pay said that incremental abnormal costs for the first half of the 2024 financial year were expected to be about R565 million, consisting of diesel costs to run generators of R396m and net incremental energy costs of R190m.
October’s prices were driven by stronger international oil prices, with Brent crude having breached the $90 mark in September for the first time in almost a year.
The Automobile Association said it was concerned that South Africa’s government has not announced any measures to deal with fuel prices more effectively.
This latest round of increases will hit consumers hard at a time when they are already feeling extreme financial pressure, the association said.
Meanwhile, trade union UASA said it is deeply concerned by the escalating fuel prices, considering the financial pressure that South Africans endure.
“Again, consumers will be the hardest hit as fuel prices influence the cost of almost all other products. The knock-on effect on food and other necessities becomes a roller-coaster as businesses carry over their expenses to the consumer. Fuel and food prices are among the risks the Monetary Policy Committee (MPC) identified to contribute to increased consumer price inflation (CPI). This leaves fellow consumers at a disadvantage towards any plans they may have leading into the festive season,” Abigail Moyo, spokesperson of UASA, said on Tuesday.
“UASA calls upon the government to intervene and protect South Africans against daunting economic and financial challenges coupled with unemployment and inequality. We also urge stakeholders and businesses to be considerate of consumers when pricing food and services. The cost of living is unbearable, and many have to overcome inflation on the same wages/salary as a few years ago, as companies fail to afford workers inflation-related wage/salary increases,” Moyo further said.
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