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Massive fuel price increases of well over R1 per litre are expected for all fuel grades in March 2022.
“The data is showing an increase of R1.25 a litre for 95 octane petrol, R1.24 a litre for 93 octane, R1.29/l for diesel and a significant increase of R1.22/l for illuminating paraffin,” says the AA.
An analysis of the movement in fuel prices thus far in February indicates that international petroleum prices are entirely responsible for the anticipated increases, with the stronger Rand buffering any more significant gains.
“The Rand is currently trading in a more positive band than it has for some weeks with the local currency shaving around 17 cents off oil’s negative movement. Without this, the expected increases could have been between R1.40/l and R1.47/l for fuels across the board,” the AA notes.
Given the current forecast, petrol prices in South Africa will exceed R21 for the first time, with 95 octane petrol in Gauteng costing around R21.39/l and 93 octane petrol costing around R21.13/l. This will exceed the previous high of R20.42/l in December last year.
Based on the current data, the coastal price of 95 octanes will also breach the R20/l mark for the first time, rising to R20.67/l. Diesel and illuminating paraffin will also reach previously unheard-of levels.
When viewed year on year, the CEF’s forecasted increases show significant percentage increases beginning in March 2021.
The price of 95 octane petrol inland, for instance, could potentially have a 31% increase from R16.32 a year ago to R21.39 in March 2022.
The cost of diesel could rise from R14.12 in March 2021 to R19.33 in 2022 – a 37% hike.
However, the most significant advancement is illuminating paraffin (IP), a fuel many use for heating, cooking, and lighting.
The cost of IP in March 2021 was R8.45/l. Considering the expected increase of R1.22/l for this fuel, the price in March 2022 could reach R13.19/l (off its current price of R11.97/l). This represents a whopping 56% increase year-on-year.
Although the expected increases are significant, Dawie Roodt, Chief Economist at Efficient Group, notes that they are consistent with current economic data.
“These increases aren’t unexpected, and they are supported by the numbers, especially those related to international oil prices,” he says.
“Naturally, we are concerned about these expected increases, which will undoubtedly put more pressure on already stretched consumers. These hefty increases also reaffirm our belief that a review of the fuel price is necessary to establish if there are any components within the current pricing model that can be revised to mitigate against rising costs. In addition, we again call on the Minister of Finance to strongly consider calls not to increase the General Fuel and Road Accident Fund levies in his Budget Speech next week. Any relief – even in the form of non-increases – would be welcome to a consumer base already reeling from economic hardship,” the AA concludes.
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