Cii Radio| Ayesha Ismail| 30 October 2017| 09 Safar 1439
The Automobile Association of South Africa is warning of a major fuel price increase before holiday period.
A litre of petrol will cost 4 cents more from Wednesday, with diesel set to go up between 23 and 27 cents a litre.
Fuel prices are adjusted on a monthly basis, informed by international and local factors.
The Energy Department has attributed the price hike to the depreciation of the rand against the US dollar.
The department says that international factors include the fact that South Africa imports both crude oil and finished products at a price set at the international level, including shipping costs.
The AA believes the pending fuel price hike is linked to Finance Minister Malusi Gigaba’s medium-term budget policy statement, which he delivered last week.
AA spokesperson Layton Beard explains: “We believe fuel prices have not yet felt the full effect of the rand’s weakening in the wake of the medium-term budget policy statement. We expect that impact to start with next month’s fuel calculations, meaning South Africans should prepare for further price hikes before Christmas.”
Last week, the Gigaba said South Africa would need to focus on growing the economy, rather than the performance of the currency.
The rand plummeted against the dollar as markets digested Gigaba’s statement.
He painted a bleak picture, with a poor performing economy, a growing budget deficit and a projected dip in tax revenue.
The following day, however, Gigaba told business people at an event in Cape Town that the rand is a floating exchange rate so there are many reasons why it fluctuates.
Tax revenue was expected to fall short of the initial 2017 Budget estimate by R50 billion, the largest downward revision since the 2009 recession.
A drop in tax compliance is partly to blame but Gigaba said that the sluggish economy was the main factor.
Source – EWN News
