Cape Town - Motorists will not have to dig as deep into their pockets to fuel their vehicles after Wednesday following the announcement by the government that domestic fuel prices will drop by more than R2 per litre while diesel will decrease by 56 cents.
Mineral Resources and Energy Minister Gwede Mantashe said that both 93 and 95 ULP and LRP would drop by R2.04 and diesel would fall by 56.34 cents per litre.
He said the main reason for the fuel price adjustments was because the average Brent Crude oil price decreased from $105 to $94 per barrel.
At the same time the rand appreciated slightly, on average, against the US dollar from R16.87 to R16.70 per dollar
Mantashe said the average international product prices of petrol, diesel, Illuminating Paraffin and LPG had decreased because motorists in China were driving less due to inflationary pressures, higher interest rates and persistent lockdowns.
Road Freight Association chief executive Gavin Kelly said the decrease in the cost of fuel would have a tremendous positive effect on transport costs and supply chains, which is one of the key drivers of the items measured in the “inflation basket“.
Kelly said: “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.”
He said South Africans would now pay less for fuel than they did in June 2022 and this would go a long way to placing downward pressure on inflation as well as the cost of logistics within South Africa.
Commenting on the fuel price decreases, property sector strategist at FNB Commercial Property Finance John Loos said the property markets should probably “mildly celebrate” that oil prices that are well-off their recent highs, and domestic petrol prices that are coming down
He said the global oil price spike this year looked like it was turning out to be less severe than the 2008 one.
Trade union UASA spokesperson Abigail Moyo said: “Workers will breathe a sigh of relief as the past couple of months have been tough with the fuel price skyrocketing to over R25 per litre and the Consumer Price Index, interest rates and inflation soaring at the same time.”
Moyo said that all the rising prices had resulted in financial distress for workers who had to keep abreast of the rise in the cost of living.
She said UASA was hoping that decreases in transport costs and the associated decreases in food and other commodities that are reliant on transportation cost would follow.