Johannesburg - As an illustration of how quickly international pricing trends can be overtaken by events, the unaudited mid-month fuel price data released at the weekend by the Central Energy Fund is a case in point.

Based on higher international fuel prices and a weakening Rand/US dollar exchange rate the Automobile Association predicted a rise of about 0.5 percent in the price of petrol at the end of July, and between one and two percent in the price of diesel and illuminating paraffin.

But since then the rand has risen two percent against the US dollar on the back of weaker-than-expected US inflation and retail sales numbers.

Thus the AA’s mid-month prediction that the petrol price was set to increase by up to seven cents a litre, with diesel up 22 cents and illuminating paraffin 19 cents higher, falls away.

"There was a slight decrease in the international petrol price,” the Association noted, “but diesel and paraffin are up.”

Smaller rise than predicted

Thus it seems more likely that the price of petrol in South Africa will remain more or less static, accompanied by a smaller rise than predicted - between 10 and 15 cents a litre - in the price of diesel and illuminating paraffin.

Nevertheless, the Association notes that international petroleum product prices have generally trended higher during July, while the exchange rate picture has, until now trended towards weakness, which could cause higher fuel price hikes by month-end.

"As we have previously noted, the fuel price relief of recent months is unlikely to be sustained, and motorists should be prepared to pay more at month-end," it concluded.

IOL Motoring

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