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VENTURES AFRICA – South Africans are set for further economic hardship after learning that the Department of Energy has been increased fuel price by 39 cents to R13.96 ($1.2) per litre, the highest motorist will pay in recent times.
“On December 27, a dollar cost R10.35. By January 27 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,” South Africa’s Automobile Association (AA) said in response to the increase.
The association, which earlier raised concerns about the depreciation of the Rand, also warned about a possible increase in cost of fuel due to a currency plunge from R10.35 to R11.20 in the international market between December and January. It has predicted that if the Rand continues to fall, the price might go as high as R16 ($1.45) per litre.
Last week, the Rand fell further to R11.38 and R15.50 against the dollar and Euros respectively, necessitating the decision for the increase.
South Africa’s Reserve Bank Governor, Gill Marcus confirmed the rationale behind the increase, noting that the fragility of the rand in the foreign exchange market affected the petrol price.
Maintaining fuel price stability is extremely important for an industrialized country like South Africa – Africa’s largest economy – as fluctuations can make it difficult for businesses to plan and implement short term strategies such as price setting and cost control.