Consumers in for a 'shock' with third straight fuel price increase expected in May - AA

Read : 17 times

Unexpectedly high international fuel prices have increased the likelihood of an unwelcome fuel price hike for May, the Automobile Association (AA) warned on Monday.

It was commenting on unaudited mid-month fuel price data released by the Central Energy Fund (CEF).

According to the AA, the current data suggests that petrol may increase by 56 cents a litre at the end of April, while the price of diesel may decrease by five cents and illuminating paraffin by a cent.

Subscribe to Fin24’s newsletter here If this increase materialises, this will be the third straight increase this year.

"The international product price of diesel climbed somewhat in the first half of April, while petrol has made a substantial jump," the AA said in a statement. "Diesel's smaller increase is likely due to variations in international refining capacity, as well as the approaching end of the Northern Hemisphere winter when demand for diesel fuels ... in peaking power plants and as a heating fuel diminishes."

The AA said the rand has appreciated quite strongly against the US dollar since the end of March. The daily exchange rate used for fuel price calculations rose from over R14.60/$ on March 31 to under R14/$ currently. "The ground gained by the rand has cushioned some of the blow, with diesel currently showing a slight decrease. But petrol users are in for a shock," said the AA.

"Price stability in illuminating paraffin is welcome as South Africa heads into its own winter, during which many households will be using paraffin as a heating fuel. But the rise in petrol is cause for concern when our economy is already in difficult waters."

Sign up for Free Daily Building and Construction News