AA expects an increase in the petrol price in May

DATA from the Central Energy Fund indicates that the price of fuel will increase again, by 37 or 38 c/litre, in May, the AA says.

Layton Beard, the AA spokesperson, said South African fuel prices had reached record-high increases over the past three years despite the government not increasing the General Fuel Levy or Road Accident Fund levy.

“Central Energy Fund (CEF) data indicates that unleaded 93 petrol inland in May 2022 cost R21.51 per litre but increased to R23.01 in May 2023. According to current data from the CEF, this price will again increase, by 37c/litre, in May, pushing the price close to R25.15/litre.”

Beard said the outlook for unleaded 95 inland was not much better, with the CEF data showing an increase of 38c/litre.

“This will push the price of this fuel to around R25.50/litre, higher than that R25.42 seen in August 2022, but not quite the record price of R26.74 in July that year. Despite this bad news, diesel is set to decrease by 35c/litre while illuminating paraffin is also set to come down, by 28c/litre.“

Beard said the drop in diesel prices was especially welcome as it would not result in higher input costs across various sectors and that would, in turn, not be a driving factor in consumer prices increasing.

He said a review of the data showed that the expected increases in the cycle were a result of fluctuations in international product prices that had taken a sharp upward trajectory at the beginning of the month.

“The relative stability of the rand against the US dollar in the early part of the month is contributing only a small margin to the expected increases.”

Beard said that with tension increasing in the Middle East, the local currency could be under significant pressure going into the last two weeks of April and have a more significant impact on local fuel prices in May.

“At this stage, it’s important to keep an eye on that indicator as we head into the new month.”

Beard added that the expected increases reaffirmed the AA’s belief that a review of the fuel price structure was necessary in order to establish if any components within the pricing model could be revised by the Department of Mineral Resources and Energy to mitigate against rising costs.

Dr Ntokozo Nzimande, a senior lecturer in the economics department at UCT, said many factors affect the fuel price.

“Fuel prices are likely to react to the fears of a war in the Middle East. The uncertainty in the country due to the impending elections has impacted the rand. But, between now and May is a long time; anything can still happen. I think petrol prices will likely react if the situation gets tense and the rand continues to dip.”

The Mercury