Rising fuel prices are likely to result in higher prices across a large variety of goods and services, reports the Sunday Times.
This follows a statement from the Automobile Association of South Africa (AA) that warned motorists could be hit by fuel price hikes of “catastrophic proportions” in November.
The AA also said that paying R20 per litre for petrol before the end of 2021 was now a “realistic scenario”.
Bidvest International Logistics business development director Maria du Preez explained that this is because it is common within the logistics industry to add a fuel surcharge to deal with inconsistent fuel prices.
“The fuel surcharge is adjusted monthly and passed on to our customers, who will pass it on to you and me,” explained du Preez.
“Fuel surcharges are also applicable to air freight, and ocean freight rates are adjusted as the international oil price increases, so it’s not just a road freight challenge.”
Du Preez added that ocean freight rates are already at 309% of pre-Covid levels, and increase fuel prices are likely to raise this figure even more.
FNB economist Koketso Mano explained that fuel and electricity inflation are the top sources of upward inflationary risk.
This is because these costs affect the cost of manufacturing and selling a wide variety of goods and services.
Mano also believes that fuel prices will remain high even after the new year arrives, as demand continues to rise while supply is taking longer to adjust.
Fuel price increase for November
These comments follow the mid-month data presented by the Central Energy Fund (CEF), which suggests there could be a major increase in fuel prices in November.
- Petrol 95: increase of 98 cents per litre
- Petrol 93: increase of 96 cents per litre
- Diesel 0.05%: increase of R1.41 per litre
- Diesel 0.005%: increase of R1.42 per litre
- Illuminating Paraffin: increase R1.42 per litre
Increased fuel prices are primarily down to two reasons — a major global energy crisis, and a weaker rand.
However, these rises are also a continuation of a worrying trend in South Africa — fuel prices have on average increased by a whopping 19.9% over the last year.
“The price of inland 95-octane petrol reached an all-time high of R18.34 per litre in September 2021, biting into the pockets of motorists who were paying R15.18 per litre in September 2020 and R16.03 per litre in September 2019,” said Stats SA.
“Drivers of diesel-powered vehicles have also had to fork out more. The average diesel price was R17.18 per litre in September 2021, higher than the prices recorded in September 2020 (R14.87) and September 2019 (R16.02).”