Fuel prices are set for a significant spike when the price for February is adjusted next week. This is according to the Automobile Association (AA), which was commenting on unaudited month-end fuel price data released by the Central Energy Fund.
The Association says expects petrol to rise by up to 82 cents a litre, diesel by 59 cents, and illuminating paraffin by 60 cents. It cautions that South Africans are once again vulnerable to Rand weakness.
"Unfortunately our mid-month concerns over the advancing oil price have been borne out in practice. There has been a slow, but steady, rise in the price of oil which is likely to cause ongoing pain at the pumps. Almost all of the fuel price increases reflected by this month's data are attributable to the stronger oil price, and the average Rand/US dollar exchange rate has remained generally flat for the month, despite some large daily swings."
The AA notes that the Rand dropped to an all-time low of over R19 to the dollar last April and the currency has since appreciated to approximately its pre-COVID-19 level.
"The record low exchange rate fortunately went hand-in-hand with record low oil prices, so the impact went largely unnoticed as fuel prices plunged. But economic or policy shocks which weigh on the Rand are likely to have a more significant effect on the fuel price now that international oil prices have rebounded," the Association concludes.