There is bad news for consumers as fuel prices are set to increase by a big margin from Wednesday. But some economists say things are not as bad as they may seem.
The Department of Minerals and Energy says petrol will increase by 43 cents a litre. Diesel will go up by 55 cents a litre. Paraffin will also go up by 55 cents a litre and, LP gas will increase by 44 cents per kilogram.
This is as the international oil price has risen sharply driven by expectations of higher global demand following the development of promising COVID-19 vaccines.
Significant rand strength against the US Dollar has also helped to cushion consumers from what would otherwise have been a much steeper fuel price increase.
“The new January petrol price will still be 8.5% lower than that of January 2020 and 11.5% lower in the case of diesel. So, if seen in that light, fuel prices are exerting a downward pressure of the cost of living than an upward pressure, “says Econometrix Managing Director Dr. Azar Jammine.
Jammine says the outlook for the rest of the year is not bad either:
“There is as yet no reason for consumers to panic about a major erosion in their cost of living. Things could naturally change significantly, should the Rand depreciate to levels of 17,18, 19 to the dollar that we saw in April and May last year, were that to be repeated then we could see substantial fuel price hikes.”
The rand has come under pressure on the back of rising COVID- 19 infections in the country.
It is currently trading at R14.91 against the Dollar.
