Consumers could be in for more pain soon even if the Reserve Bank keeps the interest rate unchanged. Early indications are that motorists will be hit at the pumps.
The petrol price looks set to rise by as much as 26c a litre next month and diesel by about 1c to 3c,according to data from the Central Energy Fund for the first two weeks of July. This comes after petrol was bumped up by 29c a litre at the start of the month and diesel by 14c. The rand has seen “a slow but steady uptick” in its exchange rate to the US dollar since the start of July, according to the Automobile Association of SA.
“Over the same period, international petroleum prices have come off their mid-June highs, but not enough to offset the under-recovery in the petrol price,” said the AA. Tensions in the Middle East have contributed to the rise in the price of crude oil. It was trading at about R10.71/$ yesterday. The fund’s most recent daily update shows an average under-recovery on petrol of 24c a litre on 95-octane and nearly 27c on 93-octane.
The price of crude oil was responsible for about 90% of the under-recovery so far this month. Brent crude oil was trading above $105 a barrel yesterday. An over-recovery usually means that the fuel price will be lowered, but an under-recovery is a hint that the fuel price will rise. The increase could push the price of 95 octane petrol to above R14.30 a litre, the first time it will break this barrier.
In January last year, 95 octane petrol cost R11.86 a litre and 93-octane R11.65. On diesel, the under-recovery so far this month was around 3c a litre. Its price reached a high of R13.43 a litre on the Reef for the new 0.01% version in March, but it has since declined to R12.94. The Department of Energy makes the fuel price adjustment on the last Friday of the month, and the data for the next two weeks will determine the decision.
–TJ Strydom for Times Live