Fuel price could rise 80c/litre

By Drum Digital
23 March 2016

Independent economist Ian Cruickshanks has warned that if the Rand and oil prices remain at their current levels, motorists could expect a fuel price hike of 41c/litre in April.

By Ayanda Sitole

In addition, Finance Minister Pravin Gordhan announced an increase in the fuel levy in his recent budget speech, which could see motorists paying between 70c/litre and 80c/litre more for fuel in total.

Cruickshanks warned that such an increase would put further pressure on financially stressed households, which were already dealing with the interest rate hike announced by the Monetary Policy Committee of the Reserve Bank this month.

Cruickshanks says increases in fuel prices and interest rates should be read together with anticipated increases in food prices.

“The latest estimates from the South African Crop Estimates Committee suggested a maize harvest of just over 7 million tonnes this year – down from almost 10 million tonnes in 2015. The reason, according to the committee, is the lowest rainfall in growing areas for more than 100 years,” he says.

Potato prices are considered to be at record highs, which Cruickshanks says has “brought home the full impact of the drought”.

He believes that the stresses being placed on the economy can be read in the lead indicator of the Reserve Bank, which has reached its lowest point since November 2009, and wholesale trade numbers, which must be expected to continue declining.

Cruickshanks said that in the absence of a global recovery and domestic policy reform the only way out of the mess was for the Government to realise, “it has no choice but to start living within the country’s means, which we have not seen since Trevor Manuel vacated his post as Minister of Finance”.

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