May Fuel Prices to Fall, Easing Inflation and Borrowing Cost
Data from the Central Energy Fund (CEF) at the end of the third week of April points to another round of fuel price cuts in May, with over-recoveries of 19–21 c/L on petrol and 38 c/L on diesel translating into expected retail prices of around R21.36 for 93-octane and R21.44 for 95-octane petrol, wholesale diesel prices of R18.94–R18.96 /L and illuminating paraffin at R13.05 /L
These reductions are driven by a sustained slump in global crude prices—Brent crude remains below $70 a barrel amid supply gluts and trade-war uncertainty—and a rand that has recovered from near-record lows to around R18.60 to the dollar.
Domestically, fierce coalition debates led to the cancellation of a planned VAT hike, keeping VAT at 15% from 1 May 202. Consumer price inflation hit a near five-year low of 2.7% in March, bolstering expectations that the SARB may enact a 25 bps repo rate cut as early as May.
Projected May Fuel Price Adjustments
CEF’s unaudited third-week April data show:
- 93-octane petrol: over-recovery of 19 c/L, implying a pump price of ~R21.36/L
- 95-octane petrol: over-recovery of 21 c/L, implying a pump price of ~R21.44/L
- Diesel 0.05% & 0.005% (wholesale): over-recovery of 38 c/L, implying prices of R18.94–R18.96/L
- Illuminating paraffin: over-recovery of 30 c/L, implying a price of R13.05/L
These projected adjustments follow April’s substantial cuts and reflect continued under-recoveries of international product prices relative to local tariffs, which CEF uses to set monthly pump prices.
Underlying Drivers
Global Oil Market Dynamics
Oil prices have been under sustained downward pressure, with Brent crude trading around $68–$70 a barrel as of mid-April, buoyed by growing inventories, OPEC+ production increases, and trade-war jitters .
President Trump’s imposition—and subsequent partial rollback—of 10% reciprocal tariffs on major trading partners in early April injected volatility into markets but ultimately exacerbated supply-demand imbalances, pushing crude briefly below $63 before settling back below $70.
Currency Movements
The rand has recovered from its worst-ever levels (R19.742/USD on 8 April) to trade around R18.60/USD, the year-to-date average of 18.599, according to exchange-rate data for 2025 .
While this recovery mitigates the full benefit of lower oil prices, eroding roughly 33 c/L of fuel relief, it supports further price cuts given stable global benchmarks.
Political and Fiscal Context
A high-stakes battle over the 2025 budget’s VAT provisions culminated in the scrapping of a planned increase, with National Treasury confirming on 24 April that VAT will remain at 15% from 1 May after the ANC and DA failed to agree on the hike Reuters. This decision averts an estimated R75 billion revenue shortfall over the medium term but underscores ongoing coalition fragility within the Government of National Unity.
Inflation Outlook and Monetary Policy Implications
Statistics South Africa reported annual consumer price inflation of 2.7% in March, the lowest since June 2020, with fuel prices contributing an 8.8% year-on-year decline and a 72 c/L drop in April that feeds into CPI figures
Against this backdrop, the SARB held its repo rate at 7.50% in March but economists at Stanlib and Nedbank see room for a 25 bps cut at the May Monetary Policy Committee meeting, balancing benign domestic inflation against global risk.
Nedbank’s Johannes Khosa warns that while global uncertainties remain, “there appears to be space for another rate cut if the rand holds at current levels,” potentially providing relief for businesses and consumers amid sluggish GDP growth and the suspension of the VAT hike
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