News that fuel prices were expected to drop later this week might have left South Africans breathing a sigh of relief, but finance experts have warned that any possible relief would likely be offset by a significant increase in the price of basic foods.
This was as a result of the continuing drought and its devastating impact on the country’s grain-producing regions, said chief executive of Debt Rescue, Neil Roets.
At the weekend, the Department of Energy announced that, from Wednesday, the price of petrol was expected to drop by 22 cents a litre and the price of diesel by 9 cents.
But Roets said a combination of current economic factors meant it was, in fact, “belt-tightening time” for consumers, and that his company, which specialised in debt management, was seeing considerable growth in the number of clients it was taking on.
According to the energy department, this week’s fuel price drop was due to the strengthening of the rand against the dollar, but economist Dawie Roodt said it would likely continue to slide in the near future.
“The drop in the fuel price will almost certainly be temporary because the short-term outlook for the local currency remains problematic and we may well be looking at a fuel price hike before the end of the year,” he said.
The Automobile Association (AA) said oil prices had strengthened in the middle of the month, giving rise to concerns, but that an ongoing re-treat had allayed same and that this week would see fuel prices return to lows last seen in March.
However, the association also cautioned the public. Commenting on the rand’s recent strengthening against the dollar, it said: “There are again signs of an uptick, which has the potential to affect fuel pricing towards year-end.
“Volatility, in both oil prices and the exchange rate, continues to be evident.” A statement released on be-half of the Department of Energy on Friday, said that, from midnight tomorrow, illuminating paraffin (SMNRP) would decrease by 3 cents a litre, illuminating paraffin (wholesale) by 2 cents a litre and liquefied petroleum gas (LPG), by 47 cents a kilogram.