It’s bad news for motorists and farmers – just before the school holidays start and exactly three weeks before Christmas, the petrol price increased by 17c per litre. The wholesale price of diesel increased by 45c per litre.
“The increase in fuel is definitely not good news,” says Dawie Marais, head of information and marketing at FNB Landbou. “We expected an increase in diesel prices, but the fact that petrol prices have increased by so much is a bit of a surprise. It’s not necessarily what consumers need right now …”
The increases brought the price of 95 octane petrol to R21.47 per litre in Gauteng and to R20.68 per litre at the coast.
The wholesale price of diesel rose to R19.21 per litre in Gauteng and R18.42 per litre at the coast.
Weaker rand
The major contributor to the higher fuel prices was the rand, which weakened against the dollar from R17.53 in the previous review period to the current level of R17.93.
Internationally, petrol prices have fallen due to lower demand, higher inventory levels and the switch to cheaper products.
Petrol could have become 19c cheaper were it not for the weaker rand and the adjustment in profit margins.
The increase would have been less sharp, but Gwede Mantashe, Minister of Minerals and Petroleum Resources, approved an increase of 15.4c per litre for the annual adjustment of the wholesale and retail profit margin on petrol. The margin on diesel and paraffin was increased by 8.88c per litre.
Diesel and paraffin prices rose internationally due to higher seasonal demand in the run-up to winter in the Northern Hemisphere where diesel is used for heating.
Producers under pressure
Maree says the rising petrol price just before the holiday season is putting consumers and producers under greater pressure.
“Yes, there was a 25 basis point cut in the interest rate, which helps a little bit, but it is not going to absorb this increase. We can already see the pressure in food sales. People are moving away from, for example, more expensive cuts of red meat and looking for cheaper sources of protein.”
He points out that grain producers, who are now entering the planting season, are likely to see their direct production costs rise sharply. This will also have an indirect effect on the prices of inputs, such as fertiliser and seeds, that need to be transported. Food prices are unlikely to fall as quickly as initially expected. The increases are also not good news in terms of inflation trends and the interest rate
