South African motorists could be in for some relief at the pumps this week, despite a looming hike in fuel taxes. The latest data from the Central Energy Fund (CEF) suggests that both petrol and diesel prices are on track to drop on Wednesday, 4 June 2025.
Petrol Prices vs Tax Increases
Although Finance Minister Enoch Godongwana recently announced new inflation-linked tax increases in his 21 May budget speech, the effect on fuel prices appears to be neutralised — at least for now — by current market trends.
The general fuel levy, which hasn’t increased in three years, is set to go up to R4.01 per litre for petrol and R3.85 per litre for diesel starting 4 June. This increase, amounting to 16 cents per litre for petrol and 15 cents per litre for diesel, aims to make up for the revenue shortfall following the freeze on VAT hikes.
Importantly, other fuel-related levies, including the Road Accident Fund levy (R2.18/l) and the carbon fuel tax, remain unchanged or were already adjusted earlier in the year.
Over-Recoveries to the Rescue
Despite the tax increases, fuel prices are still projected to fall thanks to significant over-recoveries reported by the CEF at the end of May. These over-recoveries reflect the extent to which current fuel prices are above what they would be under current market conditions.
- Diesel is showing an over-recovery of 52 cents per litre
- Petrol has an over-recovery of 20 cents per litre
After accounting for the new levies, the likely pump price changes are:
| Fuel Type | Estimated Change |
|---|---|
| Petrol 93 | ↓ 4 cents per litre |
| Petrol 95 | ↓ 4 cents per litre |
| Diesel 0.05% (wholesale) | ↓ 37 cents per litre |
| Diesel 0.005% (wholesale) | ↓ 37 cents per litre |
| Illuminating Paraffin | ↓ 56 cents per litre |
So, while the tax hike chips away at the savings, drivers will still see a net reduction in fuel prices—especially for diesel.
Why Are Prices Dropping?
Several factors are behind the expected price relief:
- Stronger Rand: The local currency has remained below R18.00 to the dollar, not because of domestic strength, but due to broader weakness in the US dollar.
- Weaker Oil Prices: Global oil prices have dropped around 15% since the beginning of 2025, easing cost pressures. In recent trading sessions, oil has remained under pressure amid expectations of oversupply.
However, the benefits are not evenly spread. While diesel has seen a greater reduction in cost due to these global trends, petrol has faced slight under-recoveries recently. Even so, the net balance still favors a decrease.
The South African Reserve Bank (SARB) noted on 29 May that lower fuel prices have helped push inflation below the target range, giving the bank room to reduce interest rates. A 25 basis point rate cut is now on the table, which could further ease financial pressure on consumers.
What to Expect on 4 June
Barring any last-minute adjustments to other levies or international price shocks, South African motorists should expect lower fuel prices from Wednesday. The Department of Petroleum and Mineral Resources will confirm the official fuel adjustments before they come into effect.
While any decrease is welcome, especially in the current economic climate, it remains to be seen how long these reductions can hold amid ongoing global uncertainties. For now, though, a small but positive drop is on the horizon.
Related article: June Fuel Price Update: Slight Petrol Price Drop Expected Despite Levy Hike
