Cape Town - As if South Africans have not been floored by the devastating impact of Covid-19 and the resultant unemployment, high food prices and ever-increasing electricity, the steep fuel price increase comes as a gut punch.
Diesel will be up by a remarkable R1.48 a litre, illuminating paraffin is set to jump by a staggering R1.45 a litre, and petrol will rise by R1.21 a litre for an inland price at the pumps of R19.54 for a litre of ULP95.
Economist Professor Bonke Dumisa said this was the biggest fuel price increase in South Africa to date.
“The increase will be passed on to consumers,” he said.
Dumisa said the price of diesel and petrol was linked to the price of crude oil internationally, and had nothing to do with the country’s political landscape.
He said another increase was expected in December, leading up to Christmas.
Premier Alan Winde said the fuel price increase was going to be devastating for the poorest citizens of the Western Cape.
“It is going to affect food pricing, transport and inflation.”
Automobile Association spokesperson Layton Beard said the November fuel price hikes announced by the Minister of Energy on Monday night will be disastrous for fuel users and consumers across the board.
Beard said a perfect storm of demand imbalances, refinery costs, natural gas price hikes and rand weakness will see the petrol price close in on R20 a litre in the run-up to Christmas.
During his announcement, Mineral Resources and Energy Minister Gwede Mantashe said South Africa’s fuel prices were adjusted on a monthly basis, informed by international and local factors.
Beard said the association would continue to push for answers on how the levies incorporated into the fuel price were being allocated and managed.
“The fuel price has a direct bearing on an already weak economy as it continues to drive up inflation on essential consumer goods and affects every South African,” he said.
Cape Chamber of Commerce and Industry president Jacques Moolman said it’s bad news for the consumer and the economy, because any product or service that moves by road, rail or air and uses petrol or diesel will increase in price.
“This may result in a decrease in sales and a loss to the seller. For some companies, it may be the last straw and lead to closure and job losses,” said Moolman.
Neil Roets, chief executive of debt counselling service Debt Rescue, said the petrol price increase was a catastrophic blow for already-stretched consumers, and the knock-on effects would be felt long after Christmas – a period when consumers traditionally over-commit themselves – as more South Africans become overwhelmed with debt.
Roets said the increase doesn’t just affect the running of vehicles. He said the knock-on effect would be felt on grocery store shelves and among a host of other products.
Economist Dawie Roodt said while the outlook for economic recovery remained intact, the forces driving global commodity price increases were unlikely to subside any time soon.
Roodt said at the moment international commodity prices were quite high and there were a number of reasons for that, including certain bottlenecks globally because of economies moving out of lockdowns.
“This petrol price increase will also add additional upward pressure on the inflation rate in South Africa,” said Roodt.
Gavin Kelly, the chief executive of the Road Freight Association, said the fuel price hike would make the cost of logistics more expensive in the country.
“This could take transit freight away from us. There may be an immediate lull in transporting some items as transporters negotiate rates (especially those not on long fixed-term contracts). Some transporters may experience a cash-flow squeeze and fall out of the logistics supply chain, causing small hiccups.”
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