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Sharp fuel surges will hurt all South Africans – AA

The massive fuel price hikes announced Saturday by the Department of Mineral Resources and Energy (DMRE) will have a sharp and immediate effect on the poor, and a long-term effect on inflation.

The Automobile Association (AA) says these increases have exceeded expectations.

Fuel price increases

Impact on every South African

“For the first time in history, 95 octane petrol will rise domestically above R21 per liter by a significant margin.

“As of Wednesday, this fuel will cost R21.60/l, while on the coast it will cost R20.88/l, the first time it exceeds the level of R20/l.

“Significantly, the price of illuminating paraffin will also rise to new heights, as this fuel costs R13.18/l inland and R12.36/l at the coast,” the AA said.

This fuel is widely used in poorer communities for heating, cooking and lighting, and will be in greater demand as the country moves from a hot summer to a more temperate fall in the coming weeks.

“These increases will certainly affect every South African, given the country’s reliance on transport, manufacturing and agricultural fuels,” the AA said.

March fuel price increase

The gains for March are mainly attributable to rising international oil prices following the Russian invasion of Ukraine and would have been more severe had the Rand not stabilized against the US dollar in recent weeks.

The Rand moved positively against the US currency, shedding some negativity from the final adjusted prices.

The AA says the outlook for April remains unclear, but Russia’s military action in Ukraine could push international oil prices up, which in turn will have a local effect.

The Association notes that global volatility and the unfolding Russian attacks on Ukraine, with the response of the European Commission and its allies, does not bode well for oil price stability.

“For the time being, it is a matter of waiting to see how these prices develop in the coming weeks.”

A ‘silver edge’

“One bright spot, however, is that any increases will not be combined with increases in fuel taxes,” the AA said.

Finance Minister Enoch Godongwana announced earlier this week that General Fund for fuel and traffic accidents Taxes will not go up this year.

“This is good news, but should be tempered by what happens with general fuel pricing in the coming weeks,” concludes the Association.

READ NOW: Petrol and diesel prices to rise from Wednesday

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