THANKS to a strong-performing Rand, South Africa’s fuel price is set to drop in February.
This despite international fuel prices having risen by 36c/litre since the beginning of the year.
Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the AA (Automobile Association) said the fuel price increase of about 11% (36c/litre) began mid-December, but that the Rand/US Dollar exchange rate has enjoyed a strengthening trend for almost as long, with the local currency accelerating its gains since the middle of January.
The good news is that petrol is set to drop by 32c/litre at month-end, with diesel down by 17c and illuminating paraffin by 20c.
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‘It is important for political leaders to note the strengthening effect the recent more hands-on governance approach has had on our exchange rate, reducing many input costs for both businesses and private citizens,’ said the AA.
‘However, at the same time, we reiterate our concern that government should avoid using the fuel levy to fund fiscal shortfalls as it is a concentrated tax with rapid effects on inflation and disposable incomes.’
The association said 2017 saw some of the highest fuel prices in South Africa’s history.
While the fuel price fluctuated in the first few months of last year, the latter part of the year, after South Africa’s sovereign credit downgrade, saw six straight months of increases, with December seeing an all-time petrol price high of R14.76/litre.
‘If one graphs the exchange rate, it is inescapable that almost all sudden movements are associated with political events.
‘We appeal to government to take a more judicious approach to policy and governance in future, as Rand weakness affects poorer people disproportionately.’
These decreases come a month before Finance Minister Malusi Gigaba is set to deliver his budget speech in Parliament.
He is expected to announce an increase to the General Fuel and Road Accident Fund levies.
Such increases will have a knock-on effect on the price of fuel.
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