Listen: SA set to end year under cloud of doom and gloom as interest rates and fuel prices expected to increase

Early data points to another petrol price hike in the month of December. Picture: Ian Landsberg/African News Agency (ANA)

Early data points to another petrol price hike in the month of December. Picture: Ian Landsberg/African News Agency (ANA)

Published Nov 22, 2022


South Africans are set to end the year under a cloud of doom and gloom, with another interest rate hike predicted along with a fuel price increase in December.

On Thursday, November 24, the South African Reserve Bank’s Monetary Policy Committee (MPC) is meeting for the final time in 2022.

Economists have widely predicted another rate hike, in line with the Reserve Bank’s trend this past year of an increase every time the MPC met in efforts to cut soaring inflation in the country.

This was adjusted during the previous meeting the MPC held, with the repurchase agreement rate (repo rate) seeing an increase from 5.5% to 6.25%. As at September 2022, the prime lending rate in South Africa is 9.75%.

Frank Blackmore, a lead economist at KPMG, told “Business Report” that he predicts the MPC to increase the rate by 50 basis points (an increase of 0.5%), which could see the prime lending rate increase to 10.25%.

“I expect the MPC to announce a further 50bps increase in the repo rate after the meeting. This is expected for two reasons: Firstly, the inflation rate remains way above the 4.5% target (with September reading at 7.5%) and secondly, due to inflationary sources being global, the combating of that inflation would require a synchronised approach to be taken by all countries and with major central banks having further increased their rates, SA would also need to increase its rates so as to remain in step with those other countries,” he said.

Listen to Blackmore speak further about the rate decision below:

Meanwhile, as many consumers will be adjusting their budgets to deal with another possible increase in interest rates, early data made available by the Central Energy Fund points to yet another petrol price increase in December.

Based on the latest available daily data and thanks to a stronger rand, consumers could be looking at an increase of 50 to 70 cents.

The mid-month data points to the following increases:

  • Petrol 93: increase of 98 cents per litre;
  • Petrol 95: increase of R1.09 per litre;
  • Diesel 0.05%: decrease of 35 cents per litre;
  • Diesel 0.005%: decrease of 26 cents per litre;
  • Illuminating paraffin: increase of 31 cents per litre.

Official petrol price adjustments are expected to be announced by the Department of Energy at the end of the month and will come into effect on December 7.

Tracey-Lee Solomon, an economist from Stellenbosch University’s Bureau for Economic Research, said the petrol price increase predicted was largely a result of increasing crude oil prices.

For the month of October, Brent crude averaged around $93.60 per barrel.

So far, the crude price has averaged more than $95 per barrel in November. Fortunately, a stronger rand has offered some relief.