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Weaker Rand Spurs Concerns of February Fuel Price Surge, AA Cautions

Weaker Rand Spurs Concerns of February Fuel Price Surge, AA Cautions

In a recent announcement, the Automobile Association (AA) has raised concerns over an impending fuel price hike for South African motorists in February. The association attributes this potential increase to the impact of a weaker rand against the US dollar, according to unaudited fuel data from the Central Energy Fund.

The data suggests that motorists may face rises in all fuel grades, excluding illuminating paraffin. The AA’s analysis anticipates a marginal increase of 11 cents per liter for 95 octane petrol, approximately 14 cents for 93 octane petrol, and nearly 10 cents for diesel.

Read also: Guide to DStv South Africa’s Packages, Channels, and Pricing for 2023

The primary contributing factor, as noted by the AA, is the vulnerability of the rand against the US dollar. Despite stable international oil prices, the weakened exchange rate is expected to play a significant role in pushing fuel prices higher.

It’s crucial for consumers to be aware of these potential changes and plan their budgets accordingly, especially after a brief period of relief in the past three months. Motorists are advised to consider allocating extra funds for fuel expenses in February to mitigate the impact of the anticipated increases.

Why is the weaker rand affecting fuel prices?

The weaker rand against the US dollar is a critical factor influencing the expected increase in fuel prices. As the rand depreciates, the cost of importing oil, which is priced in dollars, becomes more expensive. This, in turn, leads to higher fuel prices domestically.

Why is illuminating paraffin exempt from the expected price hike?

While the weaker rand contributes to the overall increase in fuel prices, stable international oil prices are having a counteractive effect on illuminating paraffin prices. The consistent prices of oil on the global market are helping to keep illuminating paraffin prices lower compared to other fuel grades.

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