South African motorists are set to receive a substantial petrol price cut in October, bringing much-needed financial relief as fuel costs continue to decrease. Data from the Central Energy Fund (CEF) indicates an over-recovery of more than R1.00 per litre for both petrol and diesel, signalling a potential R4.62 reduction in petrol prices since October 2023.
Major Decline in Petrol Price
In October 2023, South Africans were paying a staggering R25.68 per litre for petrol 95 and R25.02 per litre for diesel 0.05%. Fast forward one year to October 2024, the expected petrol price drop will bring the cost down to R21.06 per litre for petrol 95 and R18.48 per litre for diesel 0.05%, representing a massive relief of R4.62 and R6.63 per litre, respectively.
| Fuel Type | October 2023 | October 2024 (Expected) | Change (R/litre) |
|---|---|---|---|
| Petrol 93 | R25.22 | R20.74 | -R4.48 |
| Petrol 95 | R25.68 | R21.06 | -R4.62 |
| Diesel 0.05% | R25.02 | R18.48 | -R6.54 |
| Diesel 0.005% | R25.22 | R18.59 | -R6.63 |
A Year of Positive Change
Fuel prices in 2024 have been on a downward trend, with petrol prices experiencing five consecutive cuts since May and diesel seeing six cuts in total. In January, petrol 95 prices started at R23.25 per litre and diesel 0.05% at R21.82. With the anticipated October reduction, petrol prices will have dropped by R2.19 per litre, while diesel prices will have seen an even larger reduction of R3.34 per litre.
This continuous drop is largely due to the weaker global oil price, driven by slower economic growth in major economies such as China and increased supply from oil-producing nations. The decline in crude oil prices, from a peak of $94 per barrel in 2024 to $74 per barrel, has been a key factor in this price relief.
Rand’s Role in Fuel Price Cuts
Despite the rand’s ongoing struggle against the US dollar, it has played a supportive role in fuel price cuts. Positive developments in South Africa’s political landscape, including reforms and temporary respite from load shedding, have strengthened the currency, though it remains far from its previous value of R15.00 per dollar.
Lower Fuel Prices Boost Inflation Outlook
Lower fuel prices have contributed to a reduction in inflation, with petrol inflation expected to drop from 1.7% year-on-year in August to around -20% in October. This will have a positive effect on South Africa’s overall inflation rate, reducing it by around one percentage point.
As motorists prepare for this welcome price drop, Izak Odendaal, an investment strategist at Old Mutual Wealth, predicts that the downward trend in fuel prices will continue, bringing further relief and helping to keep inflation in check.
What Lies Ahead
With petrol prices expected to decrease further, South African motorists can look forward to continued relief at the pump. Official confirmation from the Department of Petroleum and Mineral Resources is expected soon, with price changes to take effect on Wednesday, October 2, 2024.
Fuel price reductions are providing a much-needed reprieve in an economy still grappling with other challenges, and for now, motorists have reason to celebrate.
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