Fuel prices will be up in July, although oil weakness and a stronger Rand have kept the increase below the levels predicted in mid-June. This is according to the Automobile Association (AA) which was commenting on unaudited month-end fuel price data provided by the Central Energy Fund (CEF).
“In mid-June, petrol was set for a rise of up to 30 cents a litre, and diesel as much as 63 cents, but the picture has improved slightly in the past fortnight,” the AA said.
“We now expect more moderate increases, with petrol up around 11 cents a litre, and diesel higher by approximately 43 cents.”
The Association said that despite a turbulent period on world markets in the wake of the United Kingdom’s referendum on leaving the European Union, the average Rand/US dollar exchange rate used to calculate the fuel price strengthened slightly in the Rand’s favour during June.
This, coupled with an oil price which dropped sharply in the wake of the UK referendum result, had had a favourable effect on South African fuel prices. However, the AA warned that ongoing volatility posed a risk of further price hikes.
“Both the basic fuel price and the daily exchange rate saw wild swings either way in June,” the AA commented.
“We expect further volatility in the short to medium term as world markets continue to digest the consequences of the UK’s referendum to leave Europe. This means that any additional political or economic shocks are likely to have a strong impact on South African fuel users,” the Association concluded.