The latest data released by the Central Energy Fund (CEF) at the end of the third week in March has shown that fuel prices could swing either way when prices are decided for the month.
Thanks to a stronger rand last week, combined with lower global oil prices, motorists could see the price of petrol decrease between 1 and 3 cents per litre for April.
The data also revealed that diesel and illuminating paraffin could see prices decline at around 65 cents and R1.23 per litre, respectively.
According to Investec’s lead economist Annabel Bishop markets continue to worry about the effects of the banking crisis.
The rand reached R18.32 to the dollar today, R22.42 to the pound sterling and R19.70 to the euro. The currency is still weak, and foreigners have sold off R13.6 billion in SA bonds so far this year, while net sales of equities have been recorded too as foreigners continue to dump SA tocks,” Bishop said in a note on Monday.
“Looking ahead, much will depend on market concerns around the banking system, and the shoring up of liquidity, with central banks rushing to reassure markets on their respective banking sectors’ health, but this is not allaying concerns currently,” she said.
“Financial market volatility negatively affects risk sentiment, in turn reducing investor appetite for EM assets. Concerns over a US recession have increased, however no evidence is due in the data for several weeks yet of any economic weakness.
“Markets do not favour uncertainty, and the waiting period will also add to negative sentiment, while markets naturally fear new announcements of weakened banks with contagion from the US banking sector still affecting bank share prices globally,” Bishop said.
The official fuel prices will only be announced in early April, and other factors, such as the Slate Levy – which compensates fuel companies for oil price discrepancies during the preceding month – could also come into play, either in our favour or against.
While it appears to be good news that the fuel price equation has turned positive, a minor petrol price cut will come as little relief for motorists, who had to absorb a R1.27 increase at the beginning of March.
This pushed the price of 95 unleaded petrol up to R22.30 at the coast, while 93 unleaded retails at R22.65 inland.
The cost of living crisis in South Africa continues, with the South African Reserve Bank letting the country know later this week what it will be deciding on in terms of the repo rate.
The Reserve Bank has been on an aggressive trend of hiking the rate in a bid to help curb inflation, which saw the previous eight meetings by the committee voting for an increase.
With inflation on the up, it is likely that the MPC will decide to increase the rate once again.
Consumers will be hoping for any sort of reprieve and even a minuscule decrease in fuel prices could provide some relief, but another increase could prove disastrous for the wallets of many South Africans.
BUSINESS REPORT