There’s no question that South Africans will have a rather expensive December as fuel prices will be through the roof, says the Automobile Association, who commented on price increases announced by the Department of Mineral Resources and Energy (DMRE).
The price of oil appears to have played a major part in the steep petrol increase, with South Africans set to pay an additional 81c a litre. For the first time in history, motorists will have to fork out R20.35 for a litre of unleaded petrol with diesel users set to see an increase of 75c a litre. Paraffin will increase by 42c a litre.
According to the Association, the monumental increase simply highlights the point that an urgent investigation and recalculation of the current fuel model and its existing elements needs to be conducted.
“This price disaster is entirely homegrown. Internationally, oil prices have pulled back from their recent highs and Brent Crude is currently trading around $75 a barrel. The majority of this month’s under-recovery is because of the weakening of the Rand against the US dollar,” the Association indicated.
While the discovery of the Omicron variant and subsequent travel bans has been noted as one of the contributions to the spike in the exchange rate, the trend appears to have begun with the mid-year riots and looting.
“In under six months, South Africa has slipped from R13.40 to the US dollar in June to its current price pegged at around R16.15.”
“The increases year-on-year since December 2020 are astronomical. Petrol has increased by more than 40%, diesel by around 44%, and illuminating paraffin by more than 70%. Wages and salaries have not kept pace with these heavy increases, and consumers will undoubtedly be under more financial pressure because of the knock-on effects on other products,” said the AA.
The AA also noted the severity of these increases, further stating that this will have major negative implications on already financially constrained consumers.
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