Petrol price hike which has been the order of the day in South Africa for the past few months is about to have a new turn around.
The Automobile Association (AA) has announced that there will be a huge drop in pump price in the coming month of August.
The association said this while commenting on unaudited mid-month data released by the Central Energy Fund (CEF).
It said pump prices will drop for the first time in several months following the rand strength and oil weakness in the wake of the United Kingdom’s vote to exit the European Union.
“After initially weakening in the wake of the UK referendum result in late-June, the Rand has since strengthened steadily,” the AA said.
“At the same time, international petroleum prices have retreated on concerns over economic uncertainty following the vote. As a result, fuel prices are showing favorable gains.”
The price of petrol has already gone up by 152c since March this year.
The main reasons for the spike are the continued upward march of international petroleum prices and the weakening rand/US dollar exchange rate.
Early last month, AA warned that economic shocks which weaken the exchange rate was the brain behind the pump price hike.
It said though the rand was growing stronger per dollar, its strength isn’t good enough to effect positive change on the fuel price”giving a risk of substantial fuel price hikes at the beginning of July.
Meanwhile, the mid-month data sees petrol poised for a drop of as much as 83 cents a litre, with diesel set for a reduction of 45 cents and illuminating paraffin a reduction of 42 cents a litre.
“Despite this positive picture, predicting the likely position at the end of July remains complex,” the association said.
“The underlying trend has been towards higher fuel prices over the past months as the rand weakened and international oil prices climbed. It is not yet clear what effect recent events will have on this trend, and it would be premature to assume it has been disrupted,” it said.
Take a look at the expected petrol and Diesel prices for the month of August
|Fuel||July Inland||Expected Price|
|0.05% Diesel (wholesale)||R11.70||R11.25|