'Consumers to be hit hard by petrol price hike'

Consumers to be hit hard by next month's petrol price hike

Economists say consumers should brace themselves for the petrol price to rise by about 50 cents a litre next month. The Department of Minerals and Energy announced last month that it would impose a minimum increase of 25 cents a litre.

That's to recoup about R3 billion not passed on to motorists in previous price adjustments. Now economists say that, along with the normal adjustment, the increase could be between 40 and 60 cents a litre. This will see diesel climb well above R10 a litre for the first time ever while petrol will be just under R9.50 a litre.

International oil prices threatened to hit a record 120 US Dollar a barrell yesterday after strikes at oil refineries in Nigeria and Britain sparked fears of a supply shortage. Today, hard pressed truckers in the United States staged a protest in Washington demanding the immediate lowering of rocketing fuel prices. And here at home, consumers are in for yet another big increase.

Economists say the increase will cause food prices to rise even more and also fuel inflation, which is already above 10%.

Economist, Chris Hart says: "The rise in the fuel price has just been extreme and relentless and petrol prices of over R10 a litre and diesel prices of more than R11 is going to put further upward pressure on inflation."

Analysts say the situation could encourage Reserve Bank Governor Tito Mboweni to carry out his threat of calling an emergency meeting of the Monetary Policy Committee and hike interest rates by more than the usual 50 basis points. But economists caution against such a move.