Petrol prices have outpaced general inflation by a huge margin.
FOLLOWING months of brutal fuel price increases, the cost of petrol and diesel is set to come down in August.
The Department of Energy announced over the weekend that both grades of petrol would decrease by R1.32 per litre while diesel would see price cuts of 91 cents (50ppm) and 88 cents (500ppm). While these price reductions on the back of lower international oil prices are a step in the right direction, South Africa’s fuel prices are still extremely high in historical terms.
This hits home even harder when you consider how steeply prices have increased over the last decade. A litre of 93 Unleaded petrol in Gauteng, for instance, cost just R10.65 in August 2012 and 10 years later it sits at R24.99, which is an increase of 135 percent. In the last two years alone, the price has increased by more than R10, as the table below shows.
Petrol prices have outpaced general inflation by a huge margin. In fact, if we adjust the August 2012 petrol price against general inflation over the last 10 years, then 93 Unleaded should cost R17.53 today, according to an online inflation calculator.
Although it’s not possible to compare the retail prices of diesel as prices for this deregulated fuel differ across outlets, the wholesale price inflation over the past 10 years paints an equally grim picture. The inland wholesale price of 50ppm diesel was listed at R10.32 back in August 2012, compared to R23.98 in 2022. And that price has increased by a massive R10.44 in just two years.
International oil prices have come down in the past month, but they remain stubbornly high, with Brent Crude oil listed at $103.97 a barrel at the time of writing on August 1.
Commenting on the August 2022 fuel price decrease, which comes into effect on Wednesday, August 3, the Department of Energy said the weaker rand prevented South Africans from reaping the full benefit of lower oil prices in the past month. Had it not been for currency depreciation, the price of 95 Unleaded petrol would have decreased by around R2.18.
Further to that, with the falling away of the temporary fuel levy reduction that was introduced in April, South Africans are now paying the full tax amount of R6.11 for every litre of fuel, if you also factor in the Road Accident Fund levy.
The Automobile Association cautions that while the latest price reductions are welcome, they won’t necessarily ease general inflation in the short term.
“Decreases offer immediate relief but increases filter into the economy over time, especially as those sectors affected by them don’t immediately adjust their prices downward but instead wait for more consistent fuel cuts that lower their input costs,” the AA said. “We stand by our call that a review of the fuel price structure, and an audit of the components that comprise the fuel price, is essential and long overdue to offer sustainable solutions that mitigate against rising fuel costs in the country.”
IOL Motoring
