A petrol pump in Nairobi. 
The Automobile Association (AA) said on Wednesday that it expected retail fuel prices to fall for the fifth consecutive month in October, bringing the costs of filling your tank to two-and-a-half-year lows.
The two usual suspects are at play here: lower global oil prices and the rand’s gains against the US dollar. This combination typically heralds relief at the pumps.
Drawing its forecast on unaudited data from the Central Energy Fund, the AA projected that the 93 unleaded grade — ULP93 — would decrease by about R1.18 per litre, while the ULP95 variant would fall R1.26 per litre. And it expected the diesel price to decline by about R1.10 per litre.
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Illuminating paraffin is expected to fall by R1.04 per litre.
Falling fuel prices have been a key driver of slowing consumer inflation in South Africa, which eased to 4.6% in July from 5.1% in June, in the middle of the Reserve Bank’s 3% to 6% target range. This, in turn, has fuelled expectations of a rate cut on Thursday, 19 September 2024, when the Bank’s Monetary Policy Committee wraps up its current meeting on the matter.
Further fuel price cuts would be a boon to motorists as the summer driving season kicks into gear, but you don’t have to be a vehicle owner to feel the effects.
Economic pipeline
Lower-income South Africans rely heavily on minibus taxis, and transportation costs ripple through the wider economic pipeline. From the tractors that plough farmers’ fields to the trucks that move products to the Uber Eats motorbike driver delivering your pizza, fuel prices are a key cost.
This is the AA’s initial forecast for October. It is not set in stone and will probably be revised before the government makes the official adjustment in prices.
A widely expected US rate cut on Wednesday, for example, could spark a rally in global oil prices.
“Nonetheless, we remain confident that significant decreases will be seen to fuel prices for October,” the AA said. DM