Petrol price increases expected for September

According to mid-month fuel price data released by the Central Energy Fund (CEF), South Africans can expect a petrol price increase for September – while diesel prices are predicted to go down.

This is according to a report by BusinessTech.

The CEF data shows an under-recovery of up to 7 cents per litre for petrol, while diesel returned an over-recovery of around 12 cents per litre.

The expected price increases for all fuel types in South Africa are detailed below:

• Petrol 93 – Increase of 2 cents per litre
• Petrol 95 – Increase of 7 cents per litre
• Diesel 0.05% – Decrease of 12 cents per litre
• Diesel 0.005% – Decrease of 12 cents per litre
• Illuminating Paraffin – Decrease of 7 cents per litre

The divergence in prices between diesel and petrol is driven by the differences in costs and refining of the fuel types, stated the report.

It is important to note that these are not the final fuel price adjustments for September, as the Department of Energy makes adjustments based on a review of the entire month – meaning the outlook can change before month-end.

Pricing

South African fuel prices are mainly affected by two components – the rand/US dollar exchange rate and changes to international petroleum costs.

At mid-August, the weakening rand was the main contributor to the under-recovery in petrol prices – while international product prices remained relatively stable.

The rand experienced a volatile month due to a rise in Covid-19 infections in the country, along with adverse effects of the July riots.

In addition, like most emerging market currencies, the value of the rand is affected by the performance of the US dollar – which itself has been volatile in recent weeks.

“Much of the dollar’s strength has come from investors turning to the greenback amid expectations of early tapering by the US Federal Reserve,” said Annabel Bishop, chief economist of Investec.

“The rand remains highly sensitive to US economic data readings, and as such will likely remain volatile, and at risk of any perceived indication of US tapering on the horizon.”