Next week petrol prices could rise 26c/litre and diesel prices 29c/litre in South Africa if current market conditions remain stable for the remainder of the week, as shown by the latest figures from the Department of Energy. The next fuel price adjustment is expected on Friday, January 28 and the new prices come into operation on Wednesday, February 2.

The price increases could, for the first time since October 2008, push petrol prices in parts of the interior – such as North West and Limpopo – up above R9/litre again. At the coast petrol currently costs R8.49 for 95 octane, and in Gauteng R8.58 for 93 octane. Wholesale diesel costs R7.70/litre at the coast and R7.84 in Gauteng.
In November I forecast that the repo rate, if it did change, would decrease by 50 base points; I stated however that if this did materialise, consumers would be hard hit in other areas, thereby negating the positive impact of the decrease in the repo rate. The repo rate did decrease by 50 base points and we have seen the increase in prices in food and other commodities. Now we face a substantial hike in the petrol price which will add to the burden of cash strapped consumers.

The horary chart I delineated shows the petrol price will indeed increase and that it could very well be by the margin predicted above. Consumers’ money is not in a healthy state, and the overall tone of 2011 is similar to that of 2010. Consumers would do well to implement restraint in spending and to apply caution to their financial portfolios.