The Automobile Association (AA) has announced that it expects most fuel prices in South Africa to drop next month.
Commenting on unaudited month-end fuel price data released by the Central Energy Fund, the AA said firmer oil prices had proven stronger than a losing Rand, which means South Africans will pay less for most fuels next month.
The Association said the retreat in oil prices means that 95 octane petrol is expected to drop by around four cents a litre, with diesel down by 19 cents and illuminating paraffin by 24 cents.
It is not all good news, however, as the price of 93 octane petrol is set to increase by 6 cents per litre.
Below are the changes in South Africa’s fuel prices for September:
- 93 unleaded petrol – 6c per litre increase
- 95 unleaded petrol – 4c per litre decrease
- Diesel – 19c per litre decrease
- Illuminating paraffin – 24c per litre decrease
Rand’s performance curbs drops
The AA noted that the rand’s performance in August had limited the potential drops in fuel prices.
“The bad news for the month was the Rand, which pulled back from testing the R16.80 mark against the US dollar last month and headed towards R17.40 at mid-month, with a slight firming trend since,” the AA stated.
“On average, exchange rate losses added around 17 cents a litre to next month’s petrol price,” noted the AA.
Fortunately, this was offset by international oil prices.
However, the AA warned that international product prices had made some gains in the last week of August, which could put the fuel price on the back foot in the weeks to come.
“As the country comes to terms with the economic damage caused by the COVID-19 lockdown, there is also concern about government’s ongoing policy uncertainty and levels of corruption as highlighted by the President,” the Association says.
It added that these failings affect investor confidence and, by extension, the Rand’s strength, meaning the fuel price is higher than it should be and will take longer than necessary to return to reasonable levels in the short to medium term.