The expected huge fuel price decreases this month will be welcome news, especially for stretched South African consumers and for the growth of the economy going into the holiday and tourism season, according to the Road Freight Association (RFA).
Data indicates estimated decreases in the fuel price in the coming week as follows: R2.35 a litre for ULP95, R2.18 a litre of ULP93, 77c for 50ppm and 87c for 500ppm. Illuminating paraffin is set to drop by an estimated 87c a litre.
The RFA notes that any decrease in the cost of fuel – in particular larger decreases – will have a tremendous positive effect on transport costs and supply chains. While the price of fuel has dropped, the effects into the logistics chain should be felt in the coming quarter and will certainly make life slightly easier for consumers towards the end of the year. It should also be a boost for the local tourism industry to boot.
South Africans will now pay less for fuel than they did in June 2022. This will go a long way to placing downward pressure on inflation as well as the cost of logistics within South Africa, which is one of the key drivers of the items measured in the “inflation basket”.
It must be remembered that fuel price fluctuations are driven by the cost of oil (fuel) on the international market and the rand-dollar exchange rate. Concerns remain around the effect global instability has on these two factors and the long-term effect of high fuel prices will have on the South African economy.
There would, obviously, be a greater positive/downward effect on freight logistics if the price of diesel was to drop as dramatically as petrol has, as the majority of road freight logistics is done with diesel vehicles.
The association calls on the government to speed up programmes to make South Africa less reliant on fuel imports, by improving or expanding Sasol and similar manufacturing processes, as well as ramping up the introduction of suitable and sustainable electric vehicle programmes.
- Kelly is the CEO of the Road Freight Association
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