South Africa cuts fuel pump prices even as subsidy ends

Prices at South Africa’s fuel pumps will ease from August’s record highs as falling crude demand and increased supply from oil producers cool the average cost of Brent crude, Bloomberg reports.

The regulated retail price of 95-octane petrol will drop by 1.32 rand per liter ($0.08) to 25.42 rand per liter in Gauteng province, the country’s financial hub, while that of 93-octane petrol will drop by the same amount at 24.99 rand per litre, the Ministry of Mineral Resources and Energy announced.

The cut comes as the government ends a temporary relief measure that has been in place since April and allowed prices to rise less than Central Energy Fund figures showed over that period. The subsidy had reduced fuel prices by 1.50 rand from April to July 6 and by 75 cents per liter from July 7 to August 2. The new prices will take effect on August 3.

The wholesale price of diesel, used in agriculture and emergency power generation, will drop by 88 to 91 cents per liter, the ministry said. The maximum cost of kerosene, used for cooking and lighting in areas where many people do not have access to electricity, also falls by 1.44 rand per litre.

Falling prices will ease pressure on household finances and cool inflation, which has already crossed the upper end of the central bank’s 3 to 6 percent target band for the first time in five years in May. Fuel accounts for almost 5% of South Africa’s consumer price basket.

The retail cost of petrol has risen by 30% since the start of the year, fueling calls from opposition parties and labor groups for the government to free up the price. However, the Fuel Retailers Association has warned that such a move could make it even more expensive for consumers.

In a government gazette published on July 22, Minister of Mineral Resources and Energy Gwede Mantashe invited the public to comment on the plan to cap the price of 93 octane petrol.