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We take a look at the latest fuel prices announced by the department of energy and it seems the decline in our fuel prices were short lived.
With higher international crude oil prices and a weaker Rand the fuel prices are on the uptick again. And sadly for South African consumers the bad news doesn't end there. With new fuel levy and road accident fund increases was slapped on the April 2019 petrol price to. As government looks to collect more in taxes to fund their spending, instead of cutting their spending. And in the latest blow to consumers the June 2019 fuel price includes a new carbon tax. Just more taxes and less service delivery in South Africa |
So the fuel price story is pretty sad?
The line graphs below shows the monthly retail petrol price for 95 Octane petrol at the Reef (inland) vs the 95 Octane petrol price at the coast over the last number of years and the underlying trend in the fuel price as can be seen from the line graph below is a steady upwards slope with little to no reprieve for South Africans. With the April 2019 fuel price 95 Octane for those living in Gauteng for example sitting at R16.13 a litre. Compare this to the price of R14.01 in January 2019. Thats a R2.12 (13.14% increase in the fuel price in the last 3 months).
The November 2018 fuel prices were officially the highest retail fuel prices ever paid in South Africa, beating the highest fuel prices in history of the previous month and the month before that. While South Africans had a short reprieve from rising fuel prices in December 2018 and January 2019, the Rand has weakened since December and the world crude oil prices are substantially higher which is a lethal cocktail for rising fuel prices and in the end inflation and interest rates. With the current continued increases in the fuel prices we expect inflation to pick up from current levels pretty soon, as transportation costs starts playing a role on the prices consumers pay for fast moving consumer goods that are transported via trucks from manufacturers and wholesalers to retail outlets.
And the latest fuel levy and road accident fund levy increases announced in the February 2019 budget speech are also included in the latest fuel prices (in actual fact it was part of the fuel price increase in April 2019). And now the June 2019 fuel price includes a new carbon tax too. In total fuel prices increased by 9c a litre for both grades of petrol. While 9c a litre doesnt sound like a lot of money. Its hunderds of millions lost to SA companies and consumers considering the large amounts of fuel we buy on a monthly basis. This will hurt already struggling consumers and a desperately struggling economy (as we saw with the release of yesterday's GDP numbers which showed South Africa's economy contracted -3.2% during the first quarter of 2019)
The South Africa government, desperate to collect more taxes decided to raise the fuel levy and the road accident fund levy effective April 2019, so these increases are now a permanent feature of the latest fuel price. And so is the carbon tax implemented this month.
The current fuel prices are fast approaching the levels record levels reached in November 2018. And the problem with the rising fuel prices is the fact that the goods we consume needs to be transported from ships, warehouses and manufacturers to retail and wholesale outlets. So this pushes up transport costs, which will push up the cost of goods bought by consumers higher which fuels inflation. And higher inflation leads to higher interest rates, as the South African Reserve Bank (SARB) loves to raise interest rates (as they showed in November 2018 by raising rates when there was no real need for it).
Currently more than 50% of the fuel price will be made up by taxes, margins, levies and other costs. Only two things in life are certain, that is death and taxes. And in South Africa it seems that the government wants to combine the two by taxing its citizens to death.
And the latest fuel levy and road accident fund levy increases announced in the February 2019 budget speech are also included in the latest fuel prices (in actual fact it was part of the fuel price increase in April 2019). And now the June 2019 fuel price includes a new carbon tax too. In total fuel prices increased by 9c a litre for both grades of petrol. While 9c a litre doesnt sound like a lot of money. Its hunderds of millions lost to SA companies and consumers considering the large amounts of fuel we buy on a monthly basis. This will hurt already struggling consumers and a desperately struggling economy (as we saw with the release of yesterday's GDP numbers which showed South Africa's economy contracted -3.2% during the first quarter of 2019)
The South Africa government, desperate to collect more taxes decided to raise the fuel levy and the road accident fund levy effective April 2019, so these increases are now a permanent feature of the latest fuel price. And so is the carbon tax implemented this month.
The current fuel prices are fast approaching the levels record levels reached in November 2018. And the problem with the rising fuel prices is the fact that the goods we consume needs to be transported from ships, warehouses and manufacturers to retail and wholesale outlets. So this pushes up transport costs, which will push up the cost of goods bought by consumers higher which fuels inflation. And higher inflation leads to higher interest rates, as the South African Reserve Bank (SARB) loves to raise interest rates (as they showed in November 2018 by raising rates when there was no real need for it).
Currently more than 50% of the fuel price will be made up by taxes, margins, levies and other costs. Only two things in life are certain, that is death and taxes. And in South Africa it seems that the government wants to combine the two by taxing its citizens to death.