December Fuel Price Increase May Dampen Holiday Cheer

Motorists in South Africa are preparing for another fuel price hike beginning Wednesday, 4 December, which presents challenges for those heading out on long-distance trips to holiday destinations during the festive season.

The Department of Minerals and Energy (DMRE) has confirmed in a statement that the cost of both 93-octane unleaded petrol (93 ULP) and 95-octane unleaded petrol (95 ULP) will increase by 17 cents per litre.

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The price of diesel containing 0.05% sulphur will rise by 54.88 cents per litre, whereas the price for diesel with a 0.005% sulphur content will see an increase of 55.88 cents per litre.

The DMRE cites the rise in fuel prices as a result of international petroleum product prices and the rand’s depreciation against the dollar, which has shifted from R17.53 to R17.93 during the review period.

These factors have been significant contributors to the increasing basic prices for both petrol and diesel.

Read: Brace for higher fuel prices in November

Following Donald Trump’s reelection as US president on 6 November, the rand has experienced further depreciation over the last month.

Since the US election, the local currency has mostly been trading above the R18 mark, a notable decline from R17.49 prior to the election.

This December fuel price increase marks the second consecutive month of rising costs. The November hike was the initial increase since May 2024.

Read:
Rand reclaims some lost ground
Rand’s reform rally wavers as Trump’s election fuels dollar strength

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The heightened fuel prices pose a serious risk to South Africa’s inflation trajectory. In recent months, the country has made significant strides in controlling inflation, with the consumer price index (CPI) notably declining to 2.8% in October, down from 3.8% in September.

Decreased fuel prices have been key in this inflation slowdown, according to Casey Sprake, an investment analyst at Anchor Capital.

Read/listen:
Inflation battle not over just yet
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She cautions in a company note that the ongoing volatility in global fuel markets is likely to create uncertainty in South Africa’s inflation outlook in the near future.

“The rand’s susceptibility to global risk aversion remains a persistent challenge, especially in light of geopolitical tensions or changes in international monetary policy,” she notes.

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