South African Fuel Prices Update
South African motorists can look forward to some relief at the pumps as new fuel price adjustments are set to take effect on Wednesday, 7 August 2024. Month-end data from the Central Energy Fund and the Department of Petroleum and Mineral Resources indicate a promising decrease in fuel prices across the board.
Projected Fuel Price Decreases
According to the Central Energy Fund, the average recovery data for the end of July suggests petrol prices will drop by 7 to 15 cents per litre, while wholesale diesel prices are expected to fall by 9 to 28 cents per litre.
| Fuel Type | Price Change (cents per litre) |
|---|---|
| Petrol 93 | -7 to -15 |
| Petrol 95 | -11 to -15 |
| Diesel 0.05% (wholesale) | -22 to -28 |
| Diesel 0.005% (wholesale) | -9 to -17 |
| Illuminating Paraffin | -16 to -22 |
| LPGAS | -14 (per kg) |
Factors Influencing Price Changes
- Stronger Rand: The rand has settled at a stronger position this month compared to the highs seen before the election. The exchange rate is now around R18.35/$, which has contributed significantly to the over-recovery in fuel pricing.
- Global Oil Prices: Brent crude oil prices have remained relatively stable, with slight decreases noted throughout July, remaining below $80 a barrel. The stability in global oil prices has led to a mix of recoveries, with oil prices contributing to both under-recovery and over-recovery for various fuel types.
- Market Confidence: Market confidence in South Africa’s economic policies and the Government of National Unity’s reforms have positively impacted the rand. Improvements in national fundamentals, such as the suspension of load shedding, have also played a role in bolstering confidence.
- Seasonal Demand: The Northern Hemisphere’s summer demand has caused a slight increase in international product prices for petrol, while diesel and illuminating paraffin prices decreased on average.
Detailed Analysis of Price Changes
| Fuel Type | Movement in International Product Prices | Movement in Exchange Rate | Average Unit Over/(Under) Recovery |
|---|---|---|---|
| Petrol 95 | -3.048 | 14.339 | 11.291 |
| Petrol 93 | -7.217 | 13.936 | 6.719 |
| Diesel 0.05% | 7.815 | 14.266 | 22.081 |
| Diesel 0.005% | -5.415 | 14.690 | 9.275 |
| Illuminating Paraffin | 1.608 | 14.501 | 16.109 |
Impact on Inflation and Interest Rates
The reduction in fuel prices is expected to positively impact inflation rates, potentially accelerating the South African Reserve Bank’s move to cut interest rates. Although June saw a slight improvement in inflation, July’s figures will be pressured by electricity price increases. However, the decrease in petrol prices should help counteract some of this pressure.
Economists predict that with another fuel price cut expected in August, inflation should move towards the central point of the SARB’s target range (4.5%), with interest rate cuts anticipated to begin in September.
Official Fuel Price Changes for August 2024
Inland:
| Fuel Type | July Official Price (R) | August Official Price (R) |
|---|---|---|
| 93 Petrol | 22.86 | 22.71 |
| 95 Petrol | 23.26 | 23.11 |
| Diesel 0.05% (wholesale) | 20.66 | 20.38 |
| Diesel 0.005% (wholesale) | 20.91 | 20.74 |
| Illuminating Paraffin | 15.02 | 14.80 |
| LPGAS (per kg) | 36.09 | 35.95 |
Coastal:
| Fuel Type | July Official Price (R) | August Official Price (R) |
|---|---|---|
| 93 Petrol | 22.07 | 21.92 |
| 95 Petrol | 22.47 | 22.32 |
| Diesel 0.05% (wholesale) | 19.87 | 19.59 |
| Diesel 0.005% (wholesale) | 20.15 | 19.98 |
| Illuminating Paraffin | 14.02 | 13.80 |
| LPGAS (per kg) | 33.13 | 32.99 |
Conclusion
The anticipated decrease in fuel prices will bring significant relief to South African motorists, especially diesel users who faced potential price hikes earlier in the month. The overall economic outlook remains positive, supported by stable government policies and stronger national fundamentals.
This detailed analysis highlights the upcoming changes in fuel prices and their potential impact on the South African economy. Continued monitoring of global oil prices and the strength of the rand will be crucial in determining future adjustments.
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