Motorists should brace themselves for a 20c/litre fuel increase on 7th August, said economists this week.
Econometrix economist, Laura Campbell, said that on an average basis, Brent crude oil prices have increased to around $107 (R1050.92) per barrel (bbl.) in July to date compared with an average of $103.32 (R1014.78) in June.
“Oil prices have increased in July compared with June on the back of fairly positive data out of the United States and even signs of an increase in demand for oil in the Eurozone, which is used to gauge future oil demand,” said Campbell.
Meanwhile, economist Dawie Roodt told iafrica.com that the increase is imminent because the international oil price has been relatively high and that will push up the local petrol price.
The latest anticipated increase comes hot on the heels of last month’s increase that had motorists forking out 84c a litre for petrol and 78c a litre for diesel.
According to reports the retail price of petrol in South Africa increased by 6.8 percent while diesel rose by 6.9 percent in June.
Last month, Thandiwe Maimane, spokesperson for the Department of Energy, said the rand weakened sharply against the United States (US) dollar and contributed to an increase in the basic fuel price (BFP) by at least 57 c per litre.
Currency influence on petrol prices
Last month Maimane said the weaker rand was the main attribution to the slowdown in the economic growth in emerging markets and the expected slump in the demand of commodities.
She said the rand’s vulnerability was also due to negative sentiments emanating from concerns over anticipated labour disputes and market expectations of industrial actions.
Campbell echoed this sentiment and added that the rand’s depreciation over the past months has been the steepest among emerging market currencies since the beginning of the year.
But while motorists are going to have to dig deeper into their pockets to pay for fuel, Campbell said the recent strengthening of the rand against the Dollar has served to limit the expected rise in the price of petrol in August.
What next for motorists?
Sasfin financial consultant, Gavin Came, said consumers should reduce their expenses in other areas as far as possible to survive the next petrol hike as painlessly as possible.
“You should try to cut out everything that is not an essential expense. Now would be the right time to stop smoking, cut back on holidays as well as entertainment,” said Came.