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Economists optimistic about August fuel price relief but caution that economic pressures remain

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Experts have agreed that a fuel price decrease is likely in August, but warned consumers to watch their spending as the country was still going through difficult financial times.

File picture: Doctor Ngcobo African News Agency (ANA)

THE AUTOMOBILE Association (AA) has predicted a slight decrease in the price of fuel at the beginning of next month.

Experts have agreed that a fuel decrease is likely, but warned consumers to watch their spending as the country was still going through difficult financial times.

Professor Irrshad Kaseeram, of the University of Zululand’s Economics Department, said a fuel price decrease was likely and would be a great relief to consumers.

“It is the motorists and commuters that will start seeing the immediate relief.”

Layton Beard, spokesperson of the AA, said South Africans could expect some relief at the pumps in August.

“The current numbers are showing 95 ULP petrol down by around 90c/litre, 93ULP down by around R1.07/l and the wholesale price of diesel decreasing by around 91c/l. Illuminating paraffin is also set for a decrease of about 94c/l.”

Beard described the decrease as good news for consumers and motorists that would ease some pressure on embattled budgets.

“We must, however, be cognisant of the fact that this is mid-month data, and that the price outlook may change over the next two weeks before the August adjustment is made,” he added.

Beard said the drop in international petroleum prices was driving the decreases, but they were being offset by a weaker rand/dollar exchange rate, which was eroding otherwise sharply declining fuel prices.

“These decreases will be further limited due to the return of 75c/l to the General Fuel Levy (GFL). The government has indicated that it will not alter its position that the initial R1.50 it cut from the GFL in April and May, and which was halved to 75c/l for June and July, will end in August. This means the GFL returns to its normal rate of R3.93/l in August.”

Beard said despite the forecast decrease, the price of fuel remained high and the previous sizeable increases would still impact the economy in the coming months.

“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.”

Kaseeram cautioned that this would likely only be temporary relief.

“Remember that one of the major contributing factors to the rising price of fuel was the war between Russia and Ukraine.

“At the moment this remains a talking point as there is no solution in sight to the war and there is every chance that there could be more fuel price increases in the future.”

Independent economic analyst Professor Bonke Dumisa said the price of Brent crude oil had dropped globally and that meant that a fuel price decrease was very likely.

“The price of Brent Crude oil has dropped to less than $110 a barrel and at one stage was less than $100 a barrel. The average price is at $105 and that is positive news. If it does stay around that price till next week, a fuel decrease is very likely.

“However, remember this is just temporary relief and the world economy is still under pressure.”

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