Another big fuel price cut at the pumps from Wednesday heralds added inflation relief

The Department of Mineral and Petroleum Resources said on Monday, 30 September 2024, that the price of 93 unleaded grade petrol would fall by R1.06 a litre, and that of the 95 variant would drop by R1.14 a litre.

The diesel price will fall from R1.12 a litre to R1.14, while the wholesale price of illuminating paraffin will be lowered by R1.11 a litre.

This is mostly in line with what the Automobile Association of South Africa had flagged in advance. 

The two usual suspects are behind this move: the rand has gained ground against the greenback, while global oil prices have cooled.

“The rand appreciated on average, against the US dollar (from 18.05 to 17.68 rand per USD) during the period under review. This led to lower contributions to the Basic Fuel Prices of all products by over 21 cents per litre,” the department said in a statement. 

Meanwhile, the average price of the benchmark Brent Crude fell to $72.82 per barrel from $78.54 over the same period as major oil producing countries raised production despite muted demand. 

It all adds up to a fifth consecutive month of falling retail prices for fuel in South Africa, bringing the levels to over two-year lows. This in turn heralds further relief on the inflation front, raising the promise of another interest rate cut before Christmas.

South Africa’s Consumer Price Index braked in August to 4.4% year on year from 4.6% in July, its slowest pace in almost three and a half years. The Producer Price Index slowed to 2.8% in August from 4.2% in July, and falling fuel prices have played a big role in this regard.

And the rand seems to be on a trajectory for further gains while global oil prices are stuck in a rut, so further domestic price cuts are probably in the pipeline.

But motorists in Nelson Mandela Bay have been partly excluded this time around after Department of Mineral and Petroleum Resources Minister Gwede Mantashe approved an application by the Liquid Fuel Wholesalers' Association to have the price cut there pared back because the wholesalers no longer used the Port Elizabeth Harbour to drop off fuel for road tankers. DM