Economists have warned motorists to brace for massive fuel price increases of up to R3.50 per litre at the pumps in June.
PwC economist Christie Viljoen told Freight News on Monday that developments in international markets, the depreciation of the rand against the USD, as well as an under-recovery could lead to another crippling rise in fuel prices at the beginning of next month.
“At present, it looks like developments on international markets have resulted in an under-recovery of nearly R2/litre in the petrol price, which will need to be added to the pump price at the start of June,” Viljoen said.
“Still-elevated international oil prices, and a recent depreciation in the rand, are to blame for this. However, the upward adjustment could be by R1.50 per litre or more, up to a total of R3.50/litre,” he warned.
Viljoen said there had been no word from government whether the R1.50/litre relief in fuel taxes implemented in April and May would be extended to June.
“If this temporary relief is rolled back, then R1.50/litre in fuel taxes will return in June and also be added to pump prices,” Viljoen said.
Economist Dawie Roodt said it was not good news for motorists that fuel prices would likely increase by R2 per litre because of the depreciation in the rand and the spike in international oil prices.
“In total, the petrol price is likely to increase by R3.50 per litre, bringing the petrol price to much higher than R25 per litre,” Roodt said.
According to the Automobile Association, data from the Central Energy Fund (CEF) points to massive fuel price increases across the board.
“In late March government reduced the GFL by R1.50 for April and May, which brought temporary relief to consumers. The big question now is how government plans to deal with rising fuel costs from June onwards, especially given that baseline prices are forecast to move significantly upwards in June,” the AA said.
“Based on current, unaudited data from the CEF, petrol is expected to increase by between R1.93 and R1.97 a litre, diesel is expected to increase by between R1.60 and R1.62 a litre, and illuminating paraffin is expected to climb by a whopping R2.14 a litre.”
The AA said similar trends were being seen throughout the world, contributing substantially to the cost of living in other countries.
The Association added that a longer-term solution to the price crisis was needed.
“We are rapidly nearing the end of May and the fuel outlook is bleak. Government needs to address this issue sooner rather than later; consumers are anxious about what lies ahead, and government should allay these concerns by indicating as early as possible what steps it will be taking to mitigate against rising fuel costs.”