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Fuel price hikes may cause inflationary pressure - Sacci

Mar 05 2019 16:13
Fin24

A series of expected fuel price hikes in coming months may lead to inflationary pressure on the local economy, according to the SA Chamber of Commerce and Industry. 

SA motorists will be paying 74 cents more per litre of petrol and between 91 and 93 cents more per litre of diesel from the early hours of Wednesday morning.

Minister of Energy, Jeff Radebe, said on Monday that the fuel price hike for March was caused by an increase in international crude oil prices.

The chamber, in a statement on Tuesday, said that while it acknowledged that global oil prices and the adverse rand/dollar exchange rate were chiefly responsible for price hikes, increases in petrol and diesel rise could cause inflationary pressure. 

"[This could lead] to potential interest rate increases and a further difficult environment for economic growth," the business body said. 

Fuel prices will likely again increase in April when the first of a series of fuel levy hikes announced by Finance Minister Tito Mboweni in his maiden Budget speech come into effect.

"We acknowledge the government’s efforts to reduce the sharpness of this negative impact by implementing the price increase in stages, with the first 20 cents coming into effect from the beginning of April 2019, and the remaining 9 cents a litre for petrol and 10 c/l for diesel coming into effect in June 2019," said the chamber. "However, taken over a period the effect will still be negative."

The chamber urged the government to "make every endeavour to trim unnecessary, wasteful and reckless expenditure" to reduce the various levies on the price of fuel.

"This cost of energy input is already overtaxed. An economy whose energy input costs keep rising and are not commensurate with economic growth and job creation is bound to hit turbulence."

sacci  |  petrol  |  sa economy  |  fuel levy  |  oil
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