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August’s fuel price decrease brings slight relief but pressure still expected to be felt

With petrol, paraffin, diesel prices set to drop on Wednesday, economists shared that this will only bring slight relief after motorists and commuters battled to adjust to the steep fuel price increases from July and previous months. Picture: Ayanda Ndamane/African News Agency (ANA)

With petrol, paraffin, diesel prices set to drop on Wednesday, economists shared that this will only bring slight relief after motorists and commuters battled to adjust to the steep fuel price increases from July and previous months. Picture: Ayanda Ndamane/African News Agency (ANA)

Published Aug 2, 2022

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Cape Town - With petrol, paraffin, diesel prices set to drop on Wednesday following the Department of Mineral Resources and Energy’s (DMRE) fuel price announcement, economists said this will only bring slight relief after motorists and commuters battled to adjust to the steep fuel price increases from July and previous months.

Based on current local and international factors, Energy Minister Gwede Mantashe said the price of petrol (93 and 95 ULP and LRP) was decreasing by R1.32 a litre, diesel (0.05% sulphur) is decreasing by R0.88/l and diesel (0.005% sulphur) by R0.91/l. Illuminating paraffin (wholesale) is decreasing by R1.44/l and SMNRP for IP by R1.92. However, the maximum LPG gas retail price increased by R0.57.

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Economist Dawie Roodt said this was a relatively small decrease in petrol prices and its impact on the economy this month would be slight, but it would at least prevent certain other prices from increasing at the same rate.

“The rate of increase in inflation would hopefully start slowing down in two months time or so,” Roodt said.

Independent economist Elize Kruger said: “The price decreases will only provide marginal relief to motorists as they do not undo the July increases and are still notably above the prices from a year ago. The average household will continue to be under pressure following months of continuously upward trending prices.”

The Automobile Association (AA) said: “We stand by our call that a review of the fuel price structure, and an audit of the components that comprise the fuel price, is essential and long overdue to offer sustainable solutions that mitigate against rising fuel costs in the country,” the AA said.

Meanwhile, the DMRE started the formal process of deregulating the price of petrol after Mantashe published a notice in the government gazette, requesting the public to make comments on his intention to introduce a price cap for 93 octane.

Kruger and Roodt were both in favour of this price cap. They said this would increase competition and lower the average price of petrol.

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