Petrol prices are likely to increase by up to 33c/l next week, dealing a further blow to consumers already burdened by rising interest rates and food prices.
The Automobile Association (AA) said in a statement on Wednesday that for both grades of petrol, the rise in international product prices added between 60c/l and 71c/l to the rising costs. However, the stronger rand may have cushioned the blow.
“The rand’s positive movement is certainly aiding consumers without which the outlook may have been gloomier. Going forward, though, we will continue to call for a re-evaluation of the fuel pricing structure to provide longer lasting solutions to mitigate against rising fuel costs,” AA said.
The potential increases in petrol prices could further erode consumers’ disposable income on the eve of the holiday season.
“Fuel and food are consuming so much of consumers’ disposable income and cannot be easily substituted,” said Kevin Lings, chief economist at Stanlib Asset Management.
“At the same time, we have seen that salary increases have not kept pace with the rising cost of living. All these have the compounding effect on households.”
Growth in households’ real disposable income slowed to just 0.5% in the six months to end-November from 3%, according to the Reserve Bank’s financial stability review report, reflecting the effects of higher inflation, particularly elevated food and fuel prices.
Consumers and businesses also felt the squeeze last week when the central bank hiked interest rates by 75 basis points, pushing up the repurchase rate to pre-Covid levels of 7% and signalled that more could be in store.
The good news, however, is that the diesel price is expected to drop by about R1.55/, and illuminating paraffin could fall by 49c/l.
“The decrease to diesel and paraffin prices is encouraging. Diesel is a major input cost in many sectors and the decrease to this fuel cost is positive for all consumers,” AA said.
“While positive, the suggested retail price of diesel in December will still be around R6.20/l more expensive than it was in January, which will have resulted in higher prices to goods and services during 2022.”
The Central Energy Fund, which adjusts fuel prices on the first Wednesday of every month, will release the figures next week.
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