AA predicts end to cycle of fuel price decrease in November
The predicted increase is the result of higher international product prices and a steady softening of the Rand against the US Dollar.
Motorists will have to dig deeper into their pockets as the five-month fuel decrease trend ends in November.
The Automobile Association (AA) has warned that fuel prices will increase next month.
Since June fuel prices have been decreasing following a drop in global oil prices, leading to a significant over-recovery in local fuel prices.
According to the AA and the unaudited data from the Central Energy Fund (CEF), the first fuel price increase since May is expected in November.
“This is a result of higher international product prices and a steady softening of the Rand against the US dollar,” the AA said.
According to fund figures, ULP95 is expected to be slightly higher by around 14 cents a litre, while ULP93 is set for an increase of around 3 cents/l.
Diesel is expected to increase by between 14 cents and 13 cents/l, while illuminating paraffin will increase by around seven cents a litre.
“Lower stable fuel prices play a crucial role in the decrease of inflation, and in lowering of the prices of goods and services.”
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The AA said it would greatly benefit the economy if the fuel price decrease trajectory continued for longer.
“Though marginal at this stage, [it] comes at a time when most consumers and motorists are still struggling financially and any increase now will add pressure on them,” it said.
The AA says fund data are indicating that the coming increase in this cycle is the result of a sharp rise in international product prices from the beginning of October, and the steady weakening of the Rand against the US dollar – both key metrics in determining local fuel pricing.
“Due to the tensions which are ramping up in the Middle East, the local currency could be under significant pressure going into the last two weeks of October and this could have a more significant impact on local fuel prices in November. At this stage it is important to keep an eye on that indicator as we head into the new month,” it said.
According to the AA, officially adjusted fuel prices will come into effect on Wednesday, November 6.
“The official announcement of the November fuel price adjustment by the Department of Mineral Resources and Energy (DMRE) is expected by Monday, November 4 at the latest.”
The AA also notes that as this is a mid-month review of the CEF data, pricing is likely to change before then, but that it expects fuel to be more expensive in November than it is currently.
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