2 February 2024

Producers should brace themselves for an increase in fuel prices on Wednesday.

January started relatively well in terms of fuel prices with an over-recovery, but it was short-lived. According to Dawie Maree, head of information and marketing at FNB, this is no longer the case.

“As things stand there is an under-recovery and an increase in the diesel and petrol prices will likely be announced next week.”

Maree says the under-recovery on diesel earlier this week was about R2 a litre, and consumers can expect a litre of petrol to become 68c-72c more expensive. A litre of diesel will probably cost 64c-68c more.

“February is traditionally not so busy for grain producers and their diesel consumption is therefore not so high. However, an increase in the diesel price remains a setback for producers,” he says

Reasons for the increase

South Africans were fortunate to avoid increases in fuel prices over the past few months but a sharp rise in the price of Brent crude oil due to the conflict in the Middle East and uncertainty about events in the Red Sea region have changed the picture.

“China is showing greater demand for oil thanks to the support of its property market,” says Maree. The Federal Reserve in America also decided to keep interest rates unchanged.

Maree says the exchange rate has had a favourable effect on fuel prices since the rand moved back below R19 to the dollar last week. “The exchange rate, therefore, provides a degree of buffer effect without which the expected increase in fuel prices could have been even more.”

The inflation rate and food prices may suffer from an increase in fuel prices, putting further pressure on consumers’ disposable income, which is already stretched.

Food prices flattened in December, rising at 8,5% compared with 9% in November. Inflation decreased to 5,1% in December from 5,5% in November.