Economists see yet another significant petrol price hike in June

MAY 18, 2016

Economists says motorists can expect yet another petrol price hike in June if the Rand continues to weaken. The Rand has so far been slightly weaker in May, trading at R15.66 on Tuesday, than the average of R14.65 in April.

According to trade union, Solidarity's senior researcher, Paul Joubert; “If these weak levels are sustained through the rest of March, it will have a significant impact on petrol and diesel prices.”

He said that international dollar prices of refined petrol and diesel (not crude oil), have both been significantly higher in May than in April at around US$50 a barrel.

“These two factors together, if sustained at current levels, will lead to the price of all grades of petrol increasing by about 47 cents per litre on 1 June, while the wholesale price of diesel will likely increase by about 68 cents per litre,” Joubert said.

This would put the retail price of 93 octane petrol in Gauteng at R12.91 per litre – still 1.3% lower than it was in June 2015. The wholesale price of diesel with 0,05% sulphur in Gauteng would cost about R11.21 per litre, which would be nearly 4% lower than it was in June 2015, he said.

Stanlib Chief Economist Kevin Lings shared the same sentiment saying: “We’ve already had two months of petrol increases and my expectation is that next month we will see another significant rise.”

He says this will have a knock-on effect for inflation.

“It’s quite a lot of pressure in the system and I guess inflation is already over the target but it will move higher during the year.”