Fuel prices set to increase in August

Higher international fuel prices and the weakening of the rand against most major currencies have increased the probability of local fuel prices increasing in August.

In a recent report, agriculture economist at Agbiz, Wandile Sihlobo, said after experiencing two consecutive monthly declines, the fuel price is set to increase on 2 August.

He outlined the following projected increases: diesel (0,05% wholesale inland) and petrol (95 ULP inland) prices could increase by 20 cents per litre (c/l) and 8c/l respectively, raising the wholesale diesel price to R11,17/litre and the retail price of petrol to R12,94/litre.

These projected increases come largely on the back of relatively higher Brent crude oil prices, which averaged US$51,75 (about R670) a barrel this month, up 8% from June. The rand-US dollar exchange also played a major role, after weakening 3% month-on-month to an average rate of R13,33 to the US dollar.

The rand-US dollar exchange also played a major role, after weakening 3% month-on-month to an average rate of R13,33 to the US dollar.

FNB agriculture economist, Paul Makube, said farmers who would be most affected were those currently harvesting, such as grain farmers, particularly those who had to transport their crops.

The strategy for farmers would be to buy forward in preparation of the fuel price hikes, he said.

In terms of food prices, the effect of fuel price hikes might filter through inflation in July, but the effects could be felt by consumers in August if there is no moderation in the international oil prices and strengthening of the rand, Makube said.

The possibility of the rand strengthening is low at present, we will remain in the current volatile market for the next six months, he added.

Layton Beard, Automobile Association spokesperson, said the increase in fuel prices had a knock-on effect, and consumers budgets would be negatively affected, for example, if you are paying R2 000/month for fuel, you might now have to pay R2 300/month.

Poor people are the ones who are most affected by the increase of paraffin prices, he said.

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