Motorists will have to dig deeper into their pockets as a significant increase in the fuel price is expected in February. Economists have attributed the increase to a weaker Rand and the price of Brent crude oil hitting $80 (R1 503) a barrel recently.
Economist Dawie Roodt said on Wednesday that a significant increase in the fuel price can be expected at the beginning of February.
“There are two main reasons for that; the first reason is that the price of international Brent Crude oil has been rising quite sharply in recent weeks. The second is that the Dollar has appreciated in recent weeks, and the result is that the Rand has weakened in response to this,” he said.
Roodt added that his suspicion is that an increase of close to R1 a litre could be on the cards for February.
“There are still two weeks left, but as it stands, a hefty increase in fuel is expected for February,” he said.
Johann Els, the group chief economist at Old Mutual, also expected a steep increase in the fuel price in February, which “ is unfortunate news for consumers”.
He said, “The Rand has weakened sharply recently as a result of the stronger US Dollar. In addition, the price of Brent Crude oil is hovering around $80 a barrel due to renewed sanctions on Russian oil.
“The combination of higher oil prices and the weaker Rand to Dollar exchange rate has meant that the underecoveries on a daily basis thus far in January for the calculation in February petrol price change has moved up to 140 cents per litre, and the running average for month-to-date is a 75 cents a litre. We are halfway through the month, so it will definitely rise from the current average of 75 cents a litre.
“My prediction is that the fuel price will increase to about R1 a litre next month. I think the Rand will improve in the future and become stronger, and the international oil price will stabilise, and hopefully, these factors will mean we won’t see a huge increase in petrol at the beginning of March,” added Els.
Professor Bonke Dumisa, an independent economic analyst, said that with the rand close to R19 recently to the dollar a fuel price increase “will definitely happen. I'm not sure how much, but it will be significant.”
Waldo Krugell, an economics professor at North-West University, said it is unfortunate that South Africa was seeing fuel price increases.
“It will definitely push inflation up a bit as fuel is part of the inflation basket. It also pushes transport costs up, but I don’t think it's a reason to worry yet, but something the Monetary Policy Committee will consider when making its interest rate decision this month,” he added.
BUSINESS REPORT