The Automobile Association expects significant decreases to fuel prices across the board in September based on current unaudited mid-month data from the Central Energy Fund (CEF).

The expected decreases will not be mitigated by any refunds to the General Fuel Levy (GFL), so they will be substantial.

The decreases to fuel prices in August were offset somewhat by the 75c/l for petrol and diesel which were returned to the GFL.

But the decreases expected in September don’t have that problem.

According to the data, 95ULP is expected to drop by around R2.60/l, and 93ULP by around R2.45/l.

The wholesale price of diesel is expected to decrease by around R2.30/l and the price of illuminating paraffin by almost R2.00/l.

The main drivers behind the decreases are a strengthening Rand and lower international oil prices.

The expected decreases are good news for consumers who have been battered and bruised by these prices the past six months. With these expected decreases, the price of 95ULP will dip below R23/l and the price of 93ULP will cost just more than R22.50/l. While fuel is still more expensive now than it was at the beginning of the year, these forecast decreases do offer some relief.

The Association says while these figures are promising, it must be remembered that this is only mid-month data and that the picture may change come month-end before the adjustments for September are made.

The Department of Energy usually announces the final adjustments to the fuel price a few days before it comes into effect, on the first Wednesday of every month. These changes will thus be in effect from 7 September.

Fuel prices have skyrocketed this year, mainly due to increases in international oil prices, which has been driven by Russia’s invasion in Ukraine.

After hitting a high of $123 in March, oil prices have slumped. On Monday, Brent crude oil dropped almost 5% to $93.46 per barrel – around its lowest levels in six months.

AFP reported that the weakness was due to new data that showed a slowing China’s economic recovery.

Meanwhile, talks are underway to revive Iran’s 2015 nuclear accord with world powers, and a deal would mean that Iran’s crude output of 2.5 million barrels per day would no longer be under international sanctions and help relieve supply constraints that have been pushing up prices.

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The SA Post Office (Sapo) has confirmed that it’s suspended the airmail service between South Africa and Hong Kong. SAPO says that the suspension is due to a lack of capacity on aircraft.

In a statement the SA Post Office said the service would be reintroduced as soon as space becomes available: “The mail service to and from China remains in operation. When sending items to other countries, please make sure that the items will be allowed into the country.  The best source of information is the website of the postal administration in the destination country.”

The statement continues: “New Zealand and Australia, for example, do not allow any items made of wood or straw. This means that a traditional pencil, for example, will be confiscated.”

Airmail between South Africa and China was suspended in April as parts of the Asian country were in lockdown due to increased Covid-19 cases.

This meant that travel restrictions were in place and there was also a lack of air connections to China which hampered the SAPO service.

SAPO’s service to Ukraine and Russia has also been hampered this year following the Russian invasion of Ukraine. At the time SAPO said: “Customers who send items to other countries must make sure they do not send anything that is not allowed in the mail, which includes any arms, ammunition, explosives, liquids or items that could break and leak. No plant or animal material may be sent to other countries.”

“The parcel should be sturdy, the address correct and the receiver’s mobile phone number should appear on the parcel, as the post office in the destination country needs it to send the receiver a text message to collect the item.”

Customers can also easily access the electronic customs declaration form on the Post Office website for quick clearance of parcels.  The form is under “tools” on the website www.postoffice.co.za.

 

Reserve Bank governor Lesetja Kganyago has announced the repo rate will be increased by 75 basis points. One member of the Monetary Policy Committee wanted a 100 basis point increase. Another member preferred a 50 basis point increase.

This latest increase will push the interest rate to 9%.

The decision to hike rates this aggressively comes on the back of the highest inflation in 13 years, surging to 7.4% in June 2022. This is the biggest increase in the repo rate since September 2002.

Kganyago says food and fuel inflation will remain elevated for the coming months.

Russia’s war in Ukraine, which is likely to persist for the rest of this year and may have significant further effects on global prices.

Analysts expect rates will continue to be increased until 2023, until the repo rate reaches the 6% of 6.25% mark – this is what it was at the end of 2019, before the Covid-19 pandemic.

The latest increase is the 5th time in a row that rates have been increased. The Reserve Bank has now increased the repo rate by 2 percentage points since November 2021.

  • Last year saw the South African economy expand by 4.9%. This year the economy is expected to grow by 2.0%, revised up from 1.7%.
  • A higher global oil price and rand weakness contribute to higher expected fuel price inflation for this year at 38.9% (up from 31.2%) and to 4.5% in 2023 (up from -0.3%).
  • As a result of higher global food prices, local food price inflation is also revised up and is now expected to be 7.4% in 2022 (up from 6.6%), and 6.2% in 2023 (up from 5.6%).
  • The Bank’s forecast of headline inflation for this year is revised higher to 6.5% (from 5.9%).