Fuel price warning for August, AA predicts small drops in petrol prices

Despite a small over-recovery in petrol prices in early July, the tide appears to be turning, and motorists should brace for a potential hike in diesel and paraffin prices in August

The Automobile Association (AA) has indicated that current unaudited data from the Central Energy Fund (CEF) shows these trends at mid-month and that they are likely to change as the month progresses.

Prices

According to the AA, 95ULP petrol is expected to decrease by approximately seven cents per litre, and 93ULP petrol by about four cents per litre.

The wholesale price of diesel is anticipated to see a marginal decrease of around one cent per litre, while illuminating paraffin prices are set to increase by roughly six cents per litre.

“It’s important to remember that this is mid-month data and that the price outlook may still change drastically over the next two weeks before the official August adjustment is made, especially since the data is edging so close to revealing a different trajectory.”

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Trends

The AA attributed the trends to sharp increases in international product prices from mid-June, which are pushing towards an under-recovery for all fuel prices.

However, the Rand/US dollar exchange rate has helped buffer against a more significant increase for diesel and illuminating paraffin, contributing to the nominal decrease for both 95 and 93ULP petrol.

The AA further notes that despite the forecast decreases in petrol prices, fuel prices in the country remain high and that previous significant increases will still impact the economy and motorists in the coming months.

“Decreases offer immediate relief at the pumps, but those sectors affected by them don’t immediately adjust their prices downward and instead wait for more consistent fuel cuts that lower their input costs over time.

“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.

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