South African motorists can anticipate mixed changes in fuel prices as December approaches.
According to unaudited mid-month data from the Central Energy Fund (CEF), petrol prices are likely to see modest decreases, while diesel and illuminating paraffin are set for notable increases.
Unleaded Petrol 95 (ULP95) is projected to drop by about 5 cents per litre, with Unleaded Petrol 93 (ULP93) expected to fall by 16 cents per litre. In contrast, diesel prices are forecasted to rise by between 38 and 40 cents per litre and illuminating paraffin by around 39 cents per litre.
The Automobile Association (AA) attributes the petrol price reduction to declining international prices, while diesel costs continue to rise.
“Although the Rand/US dollar exchange rate was stable during the first half of the review period, a slight weakening of the Rand after the U.S. presidential elections reduced the potential decrease for petrol,” the AA said.
The association noted that these figures are provisional, with the final December fuel price adjustments set to be confirmed later in November and implemented on December 4.
The AA also reminded road users to begin preparing for the festive season by ensuring their vehicles are roadworthy and encouraging responsible driving habits. "Planning for long journeys should include a full check-up of your vehicle and a commitment to safe driving," it said.
Inflation Eases to Four-Year Low
South Africa’s annual consumer price inflation (CPI) dropped to 2.8% in October 2024, down from 3.8% in September. This is the lowest inflation rate since June 2020.
Falling fuel prices were a major factor behind this slowdown, with petrol and diesel prices declining by 5.3% between September and October, said Mark Phillips, head of portfolio management and analytics at PPS Investments.
The annual fuel inflation rate now stands at -19.1%. Additionally, inflation for food and non-alcoholic beverages fell to 3.6%, its lowest level since November 2019.
Key contributors to the inflation rate included housing, utilities, and miscellaneous goods and services, which collectively added 2.1% to the CPI. Transport costs, however, were a significant negative contributor, subtracting 0.8%.
Interest Rate Cut Announced by SARB
The South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) unanimously decided to reduce the repo rate by 25 basis points, bringing it to 7.75%. The decision, aligned with market expectations, followed the release of October’s CPI data showing inflation at a four-year low of 2.8%.
The SARB’s cautious approach to monetary policy means larger rate cuts remain unlikely, even as inflation appears well-contained, said PPS Investments. Interest rates are expected to stabilize around 7% within the next year, barring any major changes in economic conditions, it said.
While South Africa’s outlook remains positive with signs of recovery in consumer confidence and other leading indicators, external risks persist.
The U.S. dollar has strengthened in the wake of the presidential election, weighing on emerging market currencies like the rand. Policies under the new U.S. administration, including potential tariffs, could also have inflationary effects globally.
Despite these challenges, lower interest rates should support economic growth in South Africa, the investment group said. While growth has been subdued this year, improvements in key indicators suggest a potential rebound ahead.
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