An increase in the price of fuel may reduce any chance of a bountiful retail season as has been enjoyed in the past, according to Road Freight Association (RFA) CEO Gavin Kelly.
This after the Central Energy Fund (CEF) announced that the price of diesel and petrol will increase on Tuesday midnight.
The cost of diesel will rise by R2.76 for 500ppm (R2.84 for 50ppm) and both grades of petrol – 93 and 95 – will cost R1.71 more per litre.
The CEF attributed the price increase to rising international fuel prices and a weaker rand.
Kelly said the increase means transportation will cost more and that will affect many spheres of life for the consumers.
“That cost will be borne by the consumer. They will pay more for everything. Transport costs will rise,” said Kelly.
“Businesses that are in logistics that cannot afford to carry loads at the rates or prices customers are prepared to pay, will simply close down.
“That means more businesses will close, more unemployment, less business and revenue driven through the transport sub-sector industries, and higher prices at the till.”
The looming fuel price increase was last seen in June 2022 and July 2022, when the price of diesel hit R25 per litre.
The RFA said many of its members have expressed concern at how the fuel cost strain is affecting their survival.
“With roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there will be increases to consumers, as the cost to transport goods increases.
“Fuel breached the 50% mark in daily operating costs during the third quarter of the year.
“Now, as we head into the final months of 2023 – with this 3.6% increase, the sector is heading towards the 60% level seen during the last months of 2022,” said Kelly.
He added that some prices will increase immediately, but more so a domino effect will ensue. He said the RFA hopes the fuel price increase is not followed by interest rates hike.
“Because if they do, together with transportation costs for goods and services, consumers will find themselves in another tight financial squeeze.
“Many consumers will stay at home and cut down on lavish spending.”
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