27 February 2024
The under-recovery on petrol and diesel means there is no good news for next month’s fuel prices.
Dawie Maree, head of information and marketing at FNB Agriculture, says fuel prices will definitely rise again next week due to this under-recovery.
The under-recovery on petrol ranges from R1,12 per litre to R1,16. “Depending on what happens this week, there may even be a larger under-recovery by next week if you look at what the exchange rate is currently doing.”
The under-recovery on diesel ranges from R1,13 per litre to R1,28. “Unfortunately, there is currently an under-recovery of R1,28 on agricultural diesel. That price is also expected to rise further.”
While the oil price has remained relatively unchanged over the past few weeks at $80-$83 per barrel, the exchange rate has fluctuated greatly.
“The exchange rate was below R18,90 against the dollar before the budget speech was delivered last Wednesday. The next day it moved to R19 and it is currently at R19,30.”
According to Maree, the fuel price increases are not good news because inflation, especially food inflation, has begun to come under control.
“Energy costs are likely to exert upward pressure on inflation. The transportation costs of food products will also rise. So, we can expect upward pressure on inflation over the next few months.
“The Reserve Bank has likely taken this into account in its decision-making and the outlook for inflation looks better.”
