As the festive season fast approaches, consumers in South Africa could get some much-needed relief in the coming month in the form of fuel price decreases.
This comes as early data released by the Central Energy Fund (CEF) showed that fuel price decreases are looking likely for November, particularly in the case of petrol.
The Automobile Association (AA) said that South Africans can breathe a sigh of relief as fuel prices are set to decrease in November, based on unaudited mid-month data from the CEF.
The current data is indicating that ULP95 is set to decrease by around R1.97/litre and R1.92/l for ULP93. Diesel, which has been on an upward trajectory for the past couple of months, is set for a decrease of around 78c/litre. The unaudited data is also pointing to a decrease to the cost of illuminating paraffin of around 74c/l.
“These significant decreases will come at a very critical time for South Africans, who have had to dig deeper into their pockets to fill up their vehicles and food trolleys with the previous cycles of fuel increases,” says the AA.
According to the CEF’s data, more stable international oil prices are the main driver behind the potential decreases for November, although the average weaker Rand-US Dollar exchange rate is shaving some of the possible decreases off what is otherwise a positive outlook.
“The outlook for November will offer some much-needed relief to consumers, especially with the decrease of diesel, which is a big input cost in major sectors such as agriculture, mining, and manufacturing, and an increase here often contributes to increased prices of basic commodities. There are still two weeks before the official adjustment for November, which could still be negatively affected by the upward trajectory of oil prices due to the ongoing conflict in Israel,” the AA further said.
Officially adjusted fuel prices come into effect on 1 November, the first Wednesday of November. An announcement on the official adjustment is announced by the Department of Mineral Resources and Energy (DMRE).
Festivity might be short-lived
While motorists could possibly enjoy fuel price decreases in November, the inflation monster that the country has been battling is seemingly not going away,
This comes after prices on the shelves have been rising in the final months of this year after inflation quickened for the second month in a row in September, pushed by rising fuel and food prices.
Statistics South Africa (Stats SA) said earlier this week that the annual headline inflation rate accelerated to 5.4% in September, up from 4.8% in August, bringing the rate to the same level as June this year.
This was slightly above market forecasts of 5.3% but remained comfortably within the 3% - 6% target band of the South African Reserve Bank (SARB).
Fuel prices in the country are largely determined by oil prices and the movement of the rand. With the ongoing crisis taking place in the Middle East, fuel prices could likely increase, spelling future fuel hikes in the last month of the year.
“The fuel index increased for a second consecutive month, rising by 7.6% between August and September. The price of inland 95-octane petrol jumped by R1.71 in September, reaching a 13-month high of R24.54. The transport category – mainly influenced by fuel – exerted strong upward pressure on the monthly inflation rate,” Stats SA chief director for price statistics Patrick Kelly said.
Economists said inflation would probably rise slightly in the coming months, with upward pressure stemming mainly from higher transport costs, resulting from fuel prices.
The price of Brent crude oil has been rising for the past three months, breaching the $90 per barrel level in September after leading producers, Saudi Arabia and Russia, committed to cutting production by one million and 300 000 barrels per day, respectively, until the end of the year.