The South African Petroleum Retailers Association (Sapra), representing the interest of numerous petroleum retailers in South Africa and a proud association of the Retail Motor Industry Organisation, says the discernible surge in average international product prices for petrol, diesel and illuminating paraffin, coupled with a depreciation of the rand against the US dollar, has far-reaching macro- and micro-economic impacts.
Lebo Ramolahloane, the vice chairperson of Sapra, says the average rand/US dollar exchange rate for the period February 2 to 29, 2024, increasing to R19.0186, compared to the previous period’s R18.7655, has a substantial impact on the basic fuel prices.
“South Africa is grappling with the repercussions of rising global oil prices and a depreciating rand causing pronounced macro-economic challenges,” he says. The widening exchange rate differential has significantly heightened the basic fuel prices, contributing an additional 17.71c/L, 18.74c/L and 18.53c/L to petrol, diesel and illuminating paraffin. “This not only elevates the country’s import bill, but also adds pressure to the trade balance and external debt dynamics,” says Ramolahloane.
He believes that intensified inflationary pressures stemming from elevated fuel prices may necessitate careful consideration by policymakers saying the potential ripple effect on consumer spending, driven by increased costs of goods and services, could influence monetary policy decisions aimed at maintaining stability in the broader economy.
Ramolahloane says at a micro-economic level, businesses and households will also be confronted with a more acute impact from this coming increase. “The increase in fuel prices directly translates into higher operational costs for businesses, particularly those reliant on transportation and logistics. For consumers, the surge in fuel prices amplifies the pressure on already strained household budgets.”
Industries dependent on fuel, such as agriculture and manufacturing, are also likely to experience heightened production costs. This can affect employment and overall economic activity. Ramolahloane says SMMEs, already navigating a challenging economic landscape, may be compelled to adjust to accommodate these elevated operational costs.
“We need government interventions, coupled with collaborative efforts from stakeholders, to mitigate the impact on businesses and households to ensure a more balanced economic response. As South Africans navigate this complex economic landscape, Sapra supports any strategies to enhance energy resilience, explore alternative energy sources and foster economic diversification to build a more robust and sustainable economic future,” concludes Ramolahloane.
Source: Cathy Findley PR
