This is the view of the Automobile Association which has said that if the Rand’s depreciation continues unchecked, a price of R16 per litre at the pumps is possible in the medium term.
“The severity of the Rand’s decline is reflected in the exchange rate numbers,” , the AA said. “On the 27th of December, a dollar cost R10.35. By the 27th of January, it cost R11.20.
Meanwhile, international petroleum prices have ticked up slightly since our last review of fuel price trends in mid-January, so it’s a double whammy for motorists.”
The AA said it was concerned that the knock-on inflationary effects of recent fuel price hikes would send further shocks into South Africa’s economy.
“Last year’s credit data showed that almost half of credit-active consumers had an impaired credit record.
We believe it will be very difficult for such people to absorb the effects of ongoing fuel price increases,” the AA concluded.