The price of petrol and diesel rose by 5.5% a litre across the country at midnight, taking the average cost of both fuels to their most expensive level ever. Figures released by the department of energy show the price of petrol climbed by 82c/litre for 93 and 95 octane fuel, while diesel was hiked between 85 and 87c/l, and illuminating paraffin went up by 82c/l.
This will take the official petrol price up to R15.54 for 93 octane, and R15.79 for 95 octane. Diesel (0.05% sulphur content) rose 6.4% to reach R14.19/l . The main reason for the massive price jump is largely as a result of the global oil price trading above the $70 per barrel mark in recent weeks. Yesterday, Brent crude was trading at $74.02 a barrel in afternoon trade. Additionally, the rand depreciated against the US dollar during the period under review, on average, when compared to the previous period.
The average rand/US dollar exchange rate for the period April 25 2018 to May 31 2018 was 12.5099 compared to 11.9797 during the previous period. This led to a higher contribution to the Basic Fuel Prices on petrol, diesel and illuminating paraffin by 30.46 c/l , 31.17 c/l and 31.53 c/l , respectively.
The Automobile Association (AA) warned this week that, should market conditions continue on the current path, motorists can expect yet another petrol price hike next month, with the price expected to soar past R16/litre.
The basic fuel price in South Africa is under R8/l, with the balance made up of an array of levies and taxes - such as the Road Accident Fund (R1.93), the General Fuel Levy (R3.37) and the wholesale and retail margins, as well as the distribution and transport costs.
For businesses and consumers, the record high fuel prices are a recipe for disaster. The fuel price becomes a massive cost consideration for all businesses that receive or deliver goods. The knock-on effects of a single petrol price hike impacts everything: suppliers’ operating expenses and customers’ disposable income. The knee-jerk reaction by business is always to pass those higher costs on to customers and clients. The result is that the price of food, goods, services and public transport such as taxis will rise exponentially.
The latest massive fuel hike - coming on top of the 1% VAT increase and generally rising prices - is going to make consumers feel the pinch.
South African consumers already collectively owe more than R1.37 trillion in outstanding debt. This is the veritable winter of our discontent.