SA Braces for Continued Fuel Price Struggles in October 2023

South Africans are facing an ongoing fuel cost crisis, and the outlook for October 2023 isn’t promising. Unaudited mid-month data from the Central Energy Fund (CEF) has raised concerns, indicating that petrol prices could increase by around R1.20 per litre, with diesel potentially rising by up to R2 per litre. These predicted increases come on the heels of the brutal fuel price hikes in September, where both grades of petrol surged by R1.71 per litre, and 50ppm diesel saw a staggering increase of R2.76.

If these predictions hold true, and assuming that the current status quo with the rand and oil prices persists, South Africans could find themselves paying just over R25 for 95 Unleaded petrol at the coast and roughly R25.74 inland, with 93 Unleaded rising to about R25.34. These significant increases would push fuel prices to levels last seen in July of the previous year, putting additional strain on the finances of South Africans already grappling with economic challenges.

The Automobile Association (AA) warns that higher fuel prices will inevitably result in increased costs at the till, impacting consumers who are already experiencing financial distress. The main culprit behind these fuel price woes is the surge in international oil prices, which have risen significantly since August, contributing to approximately 80% of the under-recovery for petrol. Brent Crude oil, for instance, was trading at $93.93 on September 18, a significant increase from the $84 mark just a month earlier. This spike was attributed to output cuts from major oil-producing nations like Russia and Saudi Arabia.

While the weaker rand, currently trading at R19.06 to the US dollar, does contribute to the fuel price deficit, its impact remains relatively smaller compared to the sharp rise in oil prices. The rand has depreciated from an average of R18.67 in August to its current level.

The official petrol and diesel prices for October will be announced early next month and come into effect on Wednesday, October 4. The outlook remains uncertain, but with rising oil prices being a major factor, South Africans are left hoping for some relief in the coming weeks. Although fuel price increases are almost certain for October, the question remains as to how much further they will climb.

In summary, South Africa is grappling with a challenging fuel price landscape, driven primarily by international factors. As the nation braces for potentially higher fuel costs in October, it’s clear that these increases will have a ripple effect on the economy, affecting consumers and businesses alike.