Steady appreciation in international petroleum prices during April has brushed aside gains in the rand-US dollar exchange rate, setting the stage for more fuel price hikes in May
This is the word from the Automobile Association (AA), which was commenting on unaudited month-end fuel price data released by the Central Energy Fund (CEF).
“The exchange rate showed a creditable strengthening during April,” the AA said. “With a flat oil price, consumers could have expected the price of fuel to drop by up to 29 cents a litre. But the recent increase in international product prices means that diesel will only drop by three to four cents a litre, with a nine cent drop on the cards for illuminating paraffin.”
However, a 42-cents-a-litre increase in the landed price of petrol considerably outstripped the exchange rate’s strength, meaning that petrol users will have to fork out an extra 12 cents a litre.
“International petroleum prices have settled into a pattern of gains which are not always being overcome by recent rand strength against the dollar,” the AA commented.
“We forecast steady rises in the price of fuel in South Africa in the short to medium term, with the possibility of larger spikes if the rand comes under pressure,” the Association concluded.