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Africa
Economy
Logistics
Road/Rail Freight

Expected fuel price reduction will slow inflation

05 Sep 2022 - by Lyse Comins
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The Road Freight Association (RFA) has welcomed the anticipated drop in the fuel price this week.

According to data released by the Central Energy Fund, which is yet to release its decision regarding the movement in the fuel price, there will be an estimated decline of R2.35 per litre for ULP95, R2.18 per litre of ULP93, 77c for diesel (50ppm) and 87c for diesel (500ppm). Illuminating paraffin is set to drop by an estimated 87 cents per litre. 

RFA CEO Gavin Kelly said the expected drop in the fuel price was good news for consumers. 

“The Road Freight Association notes that any decrease in the cost of fuel - in particular larger decreases - will have a tremendous positive effect on transport costs and supply chains.”

The effect of the price drops on the logistics chain should be felt in the coming quarter and would make life slightly easier for consumers towards the end of the year, he added.

“With fuel prices dropping, there should also be a boost for the local tourism industry to boot. South Africans will now pay less for fuel than they did in June. This will go a long way to placing downward pressure on inflation as well as the cost of logistics within South Africa, which is one of the key drivers of the items measured in the inflation basket.”

However, he said concerns remained around the effect global instability had on the international price of oil and the rand/dollar exchange rate, which impacts domestic fuel price movements.

“There would obviously be a greater positive/downward effect on freight logistics if the price of diesel were to drop as dramatically as petrol has, as the majority of road freight logistics is done with diesel vehicles.”

He urged the government to speed up programmes to make South Africa less reliant on fuel imports by improving or expanding Sasol and similar manufacturing processes, as well as ramping up the introduction of suitable and sustainable electric vehicle programmes.

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