Johannesburg - Given the extreme volatility experienced by the rand in recent times, trying to predict next month’s fuel price movement is harder than usual, but right now the mid-month data is pointing towards an increase of around 29 cents a litre for both petrol and diesel.
Although much smaller than last month’s increase, South African motorists are already buckling under record prices of more than R15 a litre for all grades of petrol in all regions and even a small increase would be difficult for most to bear.
Although the average fuel price ‘under recovery’ for the month so far stands at 29 cents, an encouraging sign is that the daily price calculations of the past week have all amounted to a deficit of less than 20 cents, even dipping to 10 cents on Thursday. Should this trend persist, the average should fall somewhat below 29 cents by the end of this month.
What’s driving the price movement?
While global oil prices have been largely to blame for the inflation we've seen in recent months, this month our currency is the culprit, as the Automobile Association explains:
“Since the start of June, the rand has steadily weakened against the US dollar, with the average cost per dollar having climbed from around the R12.50 mark to nearly R13.00. Fortunately international oil prices retreated over the same period, and have had a very small impact on the figures.
“Almost all of the increase is due to rand weakness and the picture would have looked very much worse if international oil prices had not come down over the past two weeks”.
The association further warned that oil prices could easily rise again in the short to mid term, given the recent volatility in oil markets over the last six weeks.