Stronger oil, weaker rand make more fuel price pain likely - AA

Cape Town - Stronger international oil prices, and a weakening rand, will combine to drive fuel prices higher at the end of September, the Automobile Association (AA) said on Thursday.

The AA was commenting on unaudited month-end fuel price data released by the Central Energy Fund (CEF).

The price of petrol increased by 67 cents a litre in September and by 19c in August. Diesel went up 44c a litre in September.

"The first half of September saw the rand appreciate against the dollar, but this trend has been reversed since September 12, with the weaker currency eating into its earlier gains," the AA said.

"The current rand trend is strongly weaker, and we expect it to have an even bigger impact on fuel users in the medium term."

Meanwhile, international fuel prices continued their run, having gradually climbed throughout September.
 
"As a result, petrol is set to rise by around 30 cents, diesel by 41c and illuminating paraffin by 37c," the AA commented.

"This month's figures show just how vulnerable SA fuel users are to stronger fuel prices and rand depreciation."

With the US eyeing interest rate increases, and global oil markets remaining buoyant, the AA's view is that further fuel price hikes are almost inevitable before year end."

Increasing fuel prices played a part in SA's Consumer Price Index (CPI) annual inflation rate increasing to 4.8% in August from 4.6% in July, Stats SA reported earlier this month.

"On average, prices increased by 0.1% between July 2017 and August 2017," it said.

At the end of last month the AA also explained that the majority of the fuel price increases in September was attributable to strength in international petroleum prices, with just four cents of the hikes due to rand weakness.

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