Durban - Fuel prices are expected to rise on Wednesday due to a weaker rand and the higher price of Brent crude oil.
This according to the AA and economists who spoke to The Mercury yesterday.
AA spokesperson Layton Beard said current unaudited fuel data from the Central Energy Fund showed increases in fuel prices were likely in March.
“According to the data, 93 ULP and 95 ULP petrol are expected to climb by between R1.22/litre and R1.27/l, diesel is expected to increase by around 28 cents a litre and illuminating paraffin is expected to be 16c/l more expensive in the new month.”
Beard said, based on these numbers, a litre of 95 ULP inland would climb from its current level of R21.68/l to R22.90/l, while the price at the coast would increase from around R21.03/l to R22.25/l.
“The increases to the petrol price are big and will have a negative impact on household budgets. A 50 litre tank of fuel, for instance, will now cost R61 more to fill, or R244 if filled four times a month, which is significant.
“The cumulative effect on personal finances will be a further reduction of disposable incomes which will be exacerbated by increases to goods and services, which must recoup the higher fuel input costs.”
Beard said the AA called on consumers to monitor their fuel usage carefully, and to budget accordingly. “Ensuring vehicles are well maintained and in good mechanical condition, planning routes, and avoiding heavy traffic, if possible, are some ways in which motorists can ensure better fuel consumption.”
Professor Irrshad Kaseeram, of the University of Zululand’s economics department, said the petrol price was expected to rise by R1.22 to R1.26 while diesel would rise by about 28 cents a litre.
“About 60% of this increase is due to global rising fuel prices, while 40% of the increase is due to the weakening rand due to dollar strengthening as a result of the Fed Reserve Bank adopting a hawkish monetary policy to fight inflation. This implies that the possibility of a global recession still looms, hence investors are preferring to move funds out of risky emerging markets like South Africa and investing in the secure US market.
“The implication for South Africa’s beleaguered consumers is to tighten their belts further and to resist borrowing for consumption needs.”
Economist from the University of Zululand, Dr Sheunesu Zhou, said a fuel price increase would happen.
“The main driver is the international markets ... unfortunately being an emerging economy when prices go up internationally it affects us. The rand has also been considerably weaker.
“The consumer is already paying more with the rising cost of living and this will undoubtedly filter through and make the consumer fork out even more money. The unfortunate thing is that salaries don’t increase at the same rate that prices go up.”
Professor Bonke Dumisa, an independent economic analyst, agreed that fuel price increases were a certainty.
“The price of Brent crude oil increased and this will cause the price of fuel to go up. It has nothing to do with internal South African dynamics but has to do with international prices.
“The good news is that Finance Minister Enoch Godongwana announced that the General Fuel Levy will not be increased. Last year the government tried to assist us by decreasing the General Fuel Levy. However, that was not sustainable.”