Fuel price: Yet another massive price hike in November

South African consumers will have to dig even deeper to pay for petrol, and groceries, if a forecast massive fuel price hike goes ahead as predicted in November.                                                                                                    

According to Stellenbosch University’s Bureau for Economic Research (BER) the rising price of Brent crude oil will likely mean higher petrol prices at the pumps in SA next month.

“A concern for the global and the SA economy last week was a further rise in the Brent crude oil price. Brent has averaged $82.5/bbl so far in October, up from roughly $75 in September,” BER said in its weekly report on Monday.

The Central Energy Agency provided a mid-month update of the over/under recovery on the domestic petrol price on Friday. 

“Given the sharp oil price rise and a weaker rand so far in October, this unsurprisingly signalled that a large petrol price hike is on the cards for November. The average under recovery for 95 octane petrol up to 14 October was at 98c/litre, while for diesel it was more significant at R1.42/litre,” BER noted.

The implication of a sharp rise in fuel costs in November is for SA headline CPI to accelerate in the fourth quarter of 2021. 

Statistics SA is expected to release key domestic data release when it publishings the CPI numbers for September on Wednesday. 

“We expect headline CPI to increase by a modest 0.2% month on month, with the annual rate set to accelerate slightly to 5% from 4.9% in August. The transport component is likely to provide a temporary respite after the petrol price was only slightly higher in September, while the price of diesel dropped,” BER said.

BER added that the quarterly rental survey would be key focus in the September CPI figure. 

“We anticipate the rental components to remain relatively subdued, which helps to explain the view that core CPI will only increase by 0.1% month-on-month (3% year-on-year),” BER said.