Stronger rand, cheaper oil to slam brakes on petrol price hikes

A stronger rand and cheaper international oil prices will mean the fuel prices in South Africa are likely to remain virtually unchanged in August, the Automobile Association (AA) said on Friday.

The AA, which was commenting on unaudited month-end fuel price data, said as a result, petrol is expected to increase by around 2c a litre and illuminating paraffin by 4c a litre, according to the AA. The AA expects diesel will be cheaper by approximately 4c a litre.

This was after the association warned South Africans a few weeks ago that they can expect another increase in the price of petrol, diesel and illuminating paraffin in August.

Commenting on unaudited mid-month fuel price data released by the fund at the time, the AA predicted a price rise of 19c a litre for petrol, 13c for diesel and 22c for illuminating paraffin. That would have increased the petrol price to R16.21 a litre inland, and R15.72 on the coast.

"During July, the recent weakening trend of the rand against the dollar slowed," the AA says, noting that the local currency lost some ground, but only marginally.
 
Over the same period, international oil prices showed a slight average decrease which almost exactly cancelled the rand's losses.

"After several successive fuel price increases, motorists and other fuel users are due a breather and the general stability of the fuel price during July will come as a relief to many," said the AA.

It noted, however, that international oil prices showed a slight upward trend towards the end of July and cautions that motorists' budgets would probably remain under pressure for the rest of the year.
 
"So far 2018 has been a year of volatility in the fuel price and the see-sawing rand and oil price suggest that caution should be the watchword," the association said.

On Thursday, the AA said the four consecutive fuel price increases since April this year are a symptom of SA's weak economy. In its view, deregulation of the petrol price is not necessarily a solution.

AA CEO Collins Khumalo feels a broader overview of the current economic climate in the country is needed to deal with the fuel price increases. He called for civil society to work together to find a practical solution to "a problem which goes deeper than the fuel price".

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
17.63
(-0.14)
ZAR/GBP
23.01
(-0.05)
ZAR/EUR
20.78
(-0.04)
ZAR/AUD
12.62
(-0.03)
ZAR/JPY
0.17
(-0.02)
Gold
2034.21
(+0.05)
Silver
28.28
(+0.09)
Platinum
961.50
(+0.38)
Brent Crude
44.55
(-1.53)
Palladium
2166.01
(+0.63)
All Share
56757.73
(-1.56)
Top 40
52435.65
(-1.72)
Financial 15
9897.96
(+0.10)
Industrial 25
74671.49
(-1.98)
Resource 10
58948.78
(-1.89)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 929 votes
It depends on how the funds are used.
74% - 6241 votes
No. We should have gotten the loan elsewhere.
15% - 1284 votes
Vote