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Consumers warned to brace for looming fuel price increase

Lesetja Kganyago says oil-producing countries have put measures in place to increase fuel prices.

Picture: EWN.

JOHANNESBURG - South African Reserve Bank Governor Lesetja Kganyago says consumers should brace themselves for a rise in fuel prices next month.

He announced this afternoon that the repo rate is increasing by 25 basis points to seven percent.

Kganyago also says oil-producing countries have put measures in place to increase fuel prices.

"International oil prices have recovered somewhat from their lows of below $30 per barrel seen in January, as the global oversupply appears to have subsided in the wake of production cutbacks in a number of countries."

As the government moves to improve growth and counter inflation, Kganyago says the reserve bank had no choice but to increase the repo rate.

He says inflation is outside the target range and the bank needed to be cautious.

"The year on year inflation rate, as measured by the consumer price index for all urban areas, increased markedly in January to 6.2 percent up from 5.2 percent in December."

Kganyago says the situation is set to improve, but there are still huge pressures.

"Although the longer term inflation outlook has improved somewhat, inflation is still expected to remain outside the target range for an extended period and upside risks remain."

Earlier this month, a 69 cents decrease in the price of petrol was attributed to dropping oil prices and a rally by the rand, which saw it regain some ground.

But the price of diesel had increased by around 15 cents.

This was because the two are calculated differently and less regulation applies to diesel.

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