Wednesday, 30 December 2020 13:09

Staff Reporter.

Fuel prices are expected to significantly increase in January, month-end data from the Central Energy Fund shows.

The data shows that petrol prices could be increasing by 39 and 43 cents per litre, while diesel prices could be up by between 54 and 55 cents per litre.

According to the Automobile Association (AA) the price increases are largely being driven by rising oil prices, with the rand’s strength against the dollar not enough to counter its effect.

"The rand has continued to advance against the US dollar, which is a pleasing outcome considering the severe beating the currency took earlier in the year. But even the currency’s ongoing strength has not been enough to contain oil’s march back towards its pre-Covid-19 price levels " it said.

The rand’s daily exchange rate dipped near R14.50 to the US dollar during December, with the average exchange rate hovering near R15. However there has been a nearly 13% increase in international petroleum product prices over the same period.

International oil prices have stabilised over the past few days, but the AA says it is too early to tell whether this is a new plateau, or an expected pullback as trading activity declined over the Christmas weekend.

"The trend up to December 17 was quite markedly upward, and if that picks up more steam in the new year, it won’t bode well for fuel prices in 2021," it said.

"While South African fuel prices are well off their record highs, the country’s economy is in a fragile state, and any shocks to international oil prices or the Rand/US dollar exchange rate could hurt fuel users badly."

The Department of Energy will announce the official changes before they take effect on 6 January 2021.