Brace for steep fuel price increase

MORE steep petrol prices could be in store for motorists next month, while road users woke up to record-breaking fuel prices today. This was the view of experts yesterday when they predicted a further 25¢hike next month. Efficient Group economist Dawie Roodt predicted a 25¢ increase for August, adding that this could be greater if the rand continues to slide against the dollar, and the price of crude oil, which was about $77a barrel at 6pm yesterday, continues to rise.

“We are now paying more for fuel than ever before in the history of our country, and this is going to have a  significant impact on the growth of the economy,” Roodt said. Neil Roets, chief executive of Debt Rescue, said the now almost monthly increase in fuel prices was going to add significantly to the dire circumstances faced by deeply
indebted consumers.

“Despite the government’s promise to have another look at the 1percentage point VAT increase, nothing has happened. The cost of water and electricity in Joburg and Cape Town is increasing, as is the price of food and just about everything else,” Roets said. Cosatu spokesperson Sizwe Pamla echoed what he believed to be the debilitating effects of the 15% VAT saying the government should intervene on behalf of the poor.

“The issue of VAT is not just one of expanding the zero-rated goods, because the price of food is also going to go up; as fuel increases, so does the price of food,” he pointed out. This follows Energy Minister Jeff Radebe’s announcement of a 230increase in the price of 95-octane petrol, which took the price to a record R16.02 in inland provinces last night.

Radebe pointed to the rand’s depreciation against major currencies, including the dollar, where the local currency fell from R12.51 to R13.29 to the US currency in the period under review. Brent crude oil, however, dropped from $77to $74 in the recording period, but this could not stop the government raising fuel prices for this month.

Yesterday, Layton Beard from the Automobile Association of SA said that even though it was still early to predict what the petrol price would be for August, indications were that motorists should brace for an increase next month.
“The average value of the rand to the dollar exchange rate at the moment is quite high. It is higher than it was towards the end of last month. At present, we are looking at an average of about R13.70 to the dollar.

“That gives an indication that there has been a lot of movement in the last couple of days,” Beard said. Some good news was the assertion by the National Taxi Alliance (NTA) that associations affiliated to it would absorb the input costs to their business, and not go above the R2 a single trip increase they decided on for the year. NTA  spokesperson Theo Malele said they had to factor in that about 15million people who rely on minibus taxis were working-class or poor people.

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