Sharpest fuel price hike yet leaves SA grinding its teeth

Solidarity hopes the expected increase in the cost of living, driven by the largest fuel price hike in South Africa’s history, will be short-lived.

Even after the National Treasury agreed to provide relief of R3 on the fuel levy, this fuel price hike is still a major blow.

Diesel prices in particular have skyrocketed with an increase of R7.37, representing a 39.6% increase. This means that the fuel cost of transporting a load from Gauteng to Durban is now more than R2 200 higher. The additional cost for a load to Cape Town exceeds R5 300.

“The effect of this is that inflation on all items that must be transported will rise sharply. The cost of imported products will inevitably rise more sharply, because the impact on all transport costs will be substantial,” says Theuns du Buisson, economic researcher at the Solidarity Research Institute (SRI).

This sharp increase in diesel costs will also have a noticeable impact on public transport, he said.

“Absorbing a cost increase of almost 40% is impossible. We can expect taxi and bus services to increase their prices drastically in the coming weeks. These costs will then be passed on directly to people who are already under serious financial pressure,” said Du Buisson.

Although Solidarity welcomes the relief in the fuel levy, the National Treasury must guard against putting households and businesses under further pressure when lost tax revenue is recovered in the future.

“There is great secrecy about the amount of funds that the central energy fund holds in accounts such as the Equalisation Fund.

“Now is the right time to use these funds and other emergency funds to ensure that taxpayers are not disadvantaged in the long term in paying for the current relief,” said Du Buisson.

However, he does not believe that the crisis will continue for much longer and says that if the Strait of Hormuz is reopened, international oil prices will return to normal within weeks.