Motorists in for a shock

Judging from the latest under-recovery figures of the department of minerals and energy, petrol prices could go up by as much as 64c a litre in April, said T-Sec economist Mike Schussler.

This could be the single biggest price increase in the history of regulated petrol prices.

This, together with the sharp rise in maize prices, which are expected to filter into food prices by April and May, could push the Reserve Bank's inflation target - CPIX - through its upper limit to 6.3%.

The SARB's inflation target is between 3% and 6%.

On Monday, the under-recovery on the petrol price was 80.7c and 36.3c on the diesel price. The average under-recovery from February 2 to March 5 was 78.8c.

This huge under-recovery is due mainly because of the weakening of the rand against the dollar since last week amid a global market rout.

The rand was trading in a narrow band of between R7.10 and R7.20 for most of February, but had weakened to around R7.50/$ last week.

In addition, world oil prices had risen from a low of $50 a barrel in January to around $60 a barrel.

Schussler said with the 24c/l increase on Wednesday, the under-recovery would decrease by 23c but it still means that April could see a sharp rise in the price of petrol.

Schussler's prediction of a 64c/l hike includes the 10c/l fuel and Road Accident Fund levies that kick in on April 4.

The predicted increase could push the price for 93-octane in Gauteng in April up to R6.94, close to its all-time high reached in August last year.

At the coast motorists could fork out R6.93/l for 95-octane should the rand/dollar exchange rate and world oil prices stay the same for the rest of March.