Independent Online

Tuesday, May 24, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Fuel price reduction is welcomed but small compared to recent increases

The reduction in the fuel price is actually quite small compared to the recent increases we’ve seen, economist Dawie Roodt said. Picture: African News Agency(ANA)

The reduction in the fuel price is actually quite small compared to the recent increases we’ve seen, economist Dawie Roodt said. Picture: African News Agency(ANA)

Published Jan 5, 2022

Share

Cape town - Consumers were set to experience some financial relief after their festive spending with the Department of Mineral Resources and Energy (DMRE) announcing that fuel prices would be reduced for January.

Mineral Resources and Energy Minister Gwede Mantashe said petrol prices were set to drop by between 68 and 71 cents a litre, diesel down by between 67.8 and 69.8 cents a litre, illuminating paraffin lower by 95 cents, LP gas was 70 cents cheaper per kilogramme and the Single Maximum National Retail Price (SMNRP) for IP was down by 95 cents per litre.

Story continues below Advertisement

Mantashe said the prices of all fuels were adjusted last night and would be effective from today.

Debt Rescue CEO Neil Roets welcomed the decrease as it was a positive sign for the start of the new year after the record-high fuel price hikes last year, and would have a direct impact on consumer pockets, as well as businesses that relied on transport for their goods and services.

Cape Chamber of Commerce and Industry president Jacques Moolman said: “With a lower fuel price, we have a more mobile consumer as well as lower transport costs on the supply side. So sales will hopefully increase and prices of certain goods will remain stable, or may even reduce.”

For those with discretionary spend left after the festive season, Moolman said this would allow them to get more for their rand but with the pressures the economy experienced, it was unlikely this would shift the needle to any degree on retail sales.

Economist Dawie Roodt said: “The reduction in the fuel price is actually quite small compared to the recent increases we’ve seen. The reason for the fall in the petrol price has to do primarily with the international oil price that is down.

“I believe that commodity prices will generally be falling over the next couple of months, which means we will see a further fall in the international oil price, but since SA is a commodity exporter, it is likely to have a negative impact on the currency.”

Story continues below Advertisement

Despite these decreases, the Automobile Association (AA) repeated their call for a fuel price review after the steep increases last year.

AA said the current high fuel prices should be a driving force for a review of the fuel price structure, as well as an audit of the existing prices within that structure.

“We were pleased that our calls in this regard have reached the ears of the Minister of Finance Enoch Godongwana. We welcome his pre-Christmas comments that the fuel price structure needs a critical re-look, and we call on him to make quick work of this issue ahead of his 2022 Budget Speech in February,” said the AA.

Story continues below Advertisement

Related Topics:

Fuel Prices

Share