Ricochet News

Petrol price May 2017: Petrol price expected to increase due to recent downgrades

Apr 18, 2017
Petrol price May 2017: Petrol price expected to increase due to recent downgrades

The recent credit downgrades will be felt by South African motorists in their pockets in May, according to the Automobile Association’s (AA).

Ratings agencies, Standard & Poor’s Global and Fitch, downgraded the country to the so-called 'junk status', citing political instability following the controversial dismissal of former Finance Minister, Pravin Gordhan, and his deputy, former Eastern Cape MEC for Economic Development, Mcebisi Jonas.

Commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF), the AA says the May petrol price will increase by up to 55 cents while diesel will increase by around 39c/l and illuminating paraffin by around 41c/l.

The AA said the rand’s weakness contributed three-quarters of the expected fuel price increases at the end of the month, with hikes in international petroleum prices accounting for the balance.

“The loss of confidence by investors and the sovereign ratings downgrades by ratings agencies Fitch and S&P have led to the rand slipping heavily against the US dollar, down from around R12.35 at the beginning of the month to its current position of around R13.40,” it said

"If the Rand had stayed on its previous upward course against the US dollar, it may have been strong enough to overcome the significant increases in international petroleum prices, resulting in a smaller increase in May."

In April, motorists were in for a treat as the fuel prices decreased by between 24 and 22 cents.

A litre of 95 ULP and LRP petrol dropped by 24 cents a litre.

The price for a litre of 93 ULP and LRP will drop by 22 cents a litre, while that of Diesel 0.05% Sulphur will drop by 10.50 cents a litre.

The price of Diesel 0.005% Sulphur will also drop by 10.50 cents a litre, while the wholesale price for Illuminating Paraffin will drop by 48.50 cents.