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Oil price spike and weakening rand feed massive fuel price hike

Economists have warned that fuel price and electricity tariff increases are likely to create fertile conditions for investor uncertainty.

FILE: Picture: EWN.

JOHANNESBURG - Energy experts say increasing oil prices and an ever-weakening rand are the main drivers behind the massive fuel price hike that’s set to hit motorists this coming week.

The Energy Department has announced that the price of 95 octanes will increase by R1.31 per litre for inland provinces, while motorists on the coast will have to fork out R1.26 more, 93 unleaded increases by R1.34 per litre for landlocked regions and R1.29 at the coast.

Diesel will increase by between 81 and 82 cents per litre.

The new petrol price increases come into effect from Wednesday, 3 April.

The looming fuel price hikes are set to add more pressure on already financially stretched South Africans as the increases come mere days after the planned electricity tariff hikes.

Economist Iraj Abedian says various global contributors have led to these massive hikes.

“The price hike driven by two factors; the dollar price of oil has gone up and that has to do with the global geopolitics, the supply and demand and the politics of oil supply, and, of course, the exchange value of the rand and the fact that the rand has been under pressure.”

Economist Goolam Balim says the knock-on effects will impact consumers greatly: “This only adds to consumers’ woes, given that wages have been growing at the fairly pedestrian level.”

Electricity prices are also set to go up in April.

The National Energy Regulator has allowed Eskom to implement a 9.4% increase in an attempt to rescue the cash-strapped utility from going bust.

Economists have warned that the two measures are likely to create fertile conditions for investor uncertainty, which could add more pressure on the country’s already ailing economy.

Both measures are likely to put more strain on an already ailing economy, with experts warning that the tough economic times may lead to more uncertainty about the country’s future.

After much anticipation, rating agency Moody’s delayed publishing South Africa’s credit ratings.

Economists have been worried that the power crisis, failing state-owned enterprises and slow growth will lead to the country being placed in sub-investment grade.

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