Picture: REUTERS
Picture: REUTERS

After months of steady fuel price increases, some consumers are expected to breathe a small sigh of relief in November.

The petrol price is expected to drop by about 16c a litre in November‚ the Automobile Association (AA) has predicted. 

However, it said the prices of diesel and illuminating paraffin would likely increase by about 30c a litre.

“Fuel prices have moderated during October‚ with the prospect of some relief for petrol users‚ although users of diesel and illuminating paraffin will have to cough up more‚” the AA said on Wednesday‚ commenting on unaudited fuel price data released by the Central Energy Fund.

This is a welcome respite for South Africans hard hit by seven consecutive months of fuel prices. While the government intervened in setting prices in September for the first time since the early 2000s, with a slight increase for the month, drivers faced a record-high fuel increase in October.

The fuel price is difficult to predict as the price of oil and the trajectory of the rand against the dollar are the two primary factors that influence the price on a monthly basis, which are both uncertain.

“The exchange rate started the month badly but has since leveled out‚” said the AA. “The rand's modest gains against the dollar have helped cushion the impact of rises in the landed price of fuel in the case of diesel and illuminating paraffin.”

The AA said international petroleum prices have shown modest declines in the past month which is “a cause for optimism”, adding that if the rand maintains its current trajectory of relative stability, it could augur well for fuel prices as the festive season approaches.

However, it cautioned against premature celebration. “2018 has been one of the most tumultuous years in history for South African fuel users, and the economy is still fragile and easily spooked.” 

menons@businesslive.co.za

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