Extreme price increases could push marginal businesses, including farms, to financial breaking point and have a massive negative impact on consumer pricing.
Mid-month unaudited data from the Central Energy Fund (CEF) is predicting the biggest fuel price hike in South Africa’s history by some margin. This is according to the Automobile Association (AA), which has monitored the fuel price data from September 1 to date, reports George Herald.
“A spike in international oil prices and a huge swing in the rand to US dollar exchange rate have combined to make us predict a knockout blow at the pumps at the end of September,” the AA says.
“Based on current data, petrol users will be paying R1.12 more per litre, with illuminating paraffin costing R1.17 more,” the association warned.
But it is diesel users who will be hit hardest, with a possible price hike of R1.38 per litre, pushing diesel to within a whisker of R16 per litre.
To put this in perspective; should this increase materialise, it will push the price of 93 unleaded octane fuel inland close to R17 a litre, off a January price of R14.20 – a total increase of around 20%, year-to-date.
The association also pointed out that a massive hike in the diesel price would be especially catastrophic for the agricultural sector which was already reeling from a prolonged drought. It said that extreme fuel price hikes could push marginal businesses, including farms, to financial breaking point, and have a massive negative impact on consumer pricing.
The AA said: “While we earnestly hope the picture improves before month end, we once again call on the government to urgently address the policy and structural issues which have put fuel users in the front line of the rand’s weakness.”