"If oil continues to climb, South Africans should expect further pain at the pumps in the upcoming months," was what the Automobile Association (AA) stated at the beginning of September.
This was further affirmed by The Agricultural Business Chamber (Agbiz) that believes that diesel and petrol price increases could increase for a third consecutive month by 3% on 4 October.
This is partly driven by an uptick in crude oil prices.
Apart from the obvious additional financial pressure this puts on motorists, it seems farmers are starting to feel the pinch too.
“While this expected increase seems marginal, it could add pressure on farmers as it coincides with the new season planting period. Also worth noting is that, for grain and oilseed, fuel makes up roughly 11% of production costs, therefore an increase in price will add pressure on farmers,” added Agbiz agricultural economist Wandile Sihlobo.
This could also see the wholesale diesel price rising to R12.03 per litre from R11.70 per litre in September 2017. While the retail price of petrol could increase to R14.07 per litre from the current price of R13.72 per litre, added Sihlobo.
“This expected fuel price increase is mainly driven by relatively higher Brent crude oil prices, which averaged US$53.94 a barrel this month, up by 4% from August 2017. Meanwhile, the ZAR/USD exchange had a minimal impact, as it strengthened by 2% from the previous month, averaging R13.22 at the time of writing,” detailed Agbiz.
According to Sihlobo, the implication of this will be an upward pressure on input costs, particularly in summer crop growing areas which will soon be commencing the planting activity for the 2017/18 production season.
“The agribusinesses that operate in the transport industry will also feel the pressure on input costs due to their exposure on road transport. An example of this is maize which has more than 80% stock that is transported by road,” Agbiz highlighted.