Fuel Price Hike Hits South Africans as New Year Begins

Holiday travelers in South Africa will start the new year with a hit to their wallets as both petrol and diesel prices are set to rise from January 1st. The announcement made by the Department of Mineral and Petroleum Resources (DMPR) outlines the new fuel rates across the country, affecting millions as they return from holiday festivities.

As of this Wednesday, the price for a litre of 95 ULP petrol in Gauteng will increase from R21.47 to R21.59. Coastal regions will also see a jump, with a litre of petrol going from R20.68 to R20.80. Diesel prices are following a similar trend, though specific rates have yet to be disclosed. Conversely, there will be a slight relief for those using paraffin as its price is expected to decrease.

The adjustments come at a time when global economic growth remains sluggish. According to the DMPR, a slight increase in the average Brent Crude oil price—from US$72.70 to US$72.78—contributed to the uptick. The department cited the OPEC+ decision to maintain production levels and an oversupply from non-OPEC producers as key influencers.

In addition to the crude oil scenario, the average international product prices of petrol rose, paralleling the crude oil trend, while diesel prices saw a mild drop due to increased winter inventory levels in the Northern Hemisphere.

Another factor impacting local fuel prices is the Rand's depreciation against the US Dollar, which slipped from 17.93 to 18.11 during the review period. This depreciation has a direct consequence on the Basic Fuel Prices (BFP), which saw an increase of 10.58 cents per litre for petrol and 11.11 cents for diesel, while illuminating paraffin saw an increase of 10.90 cents due to the currency’s performance.

These changes are crucial for budget planning, particularly for South African commuters and logistics companies which rely heavily on fuel. Additionally, this price hike could influence inflation rates and consumer spending as individuals and businesses adjust to higher transportation costs.

This price increase serves as a reminder of South Africa’s vulnerability to global oil market fluctuations and the local currency's stability. As the world navigates through economic uncertainties, South Africans brace for a potentially challenging start to 2023.