Cheaper fuel prices good news for South Africans in February after a sterling performance by the Rand.
According to the Automobile Association, the Rand’ strength of rand in January, led to a stronger crude oil price.
Commenting on unaudited month-end fuel price data released by the Central Energy Fund the AA said “International (fuel) prices have risen by around 11% in a streak starting on 14 December 2017,”.
“Fortunately for South Africans, the rand/US dollar exchange rate has enjoyed a strengthening trend for almost as long, with the local currency accelerating its gains since the middle of January,” it continued.
The stronger rand will set petrol prices to drop by 32 cents a litre at month end, with diesel down by 17 cents, and illuminating paraffin by 20 cents.
“It is important for political leaders to note the strengthening effect the recent more hands-on governance approach has had on our exchange rate, reducing many input costs for both businesses and private citizens,” the AA said.
“However, at the same time, we re-iterate our concern that government should avoid using the fuel levy to fund fiscal shortfalls, as it is a concentrated tax with rapid effects on inflation and disposable incomes.”
Looking at 2017’s fuel price history, the association, the AA said the year saw some of the highest fuel prices in the country’s history, saying the hikes were triggered by political events.
“If one graphs the exchange rate, it is inescapable that almost all sudden movements are associated with political events. We appeal to government to take a more judicious approach to policy and governance in future, as rand weakness affects poorer people disproportionately,” the AA said.
Petrol at R12.85 a litre and diesel at R11.02, at the beginning of 2017 and increased into March followed by a decline, by December 2017, petrol stood at a high of R14.76 a litre.