With April’s petrol prices hike creeping closer and closer, economists say that the government will have to intervene in the coming weeks to “soften the impact” of the new record-high price increase.
Economists call upon the government
On Sunday Agri SA chief economist, Kulani Siweya publically called upon the government to suspend fuel levies in order to relieve some pressure on food prices.
“With global wheat prices and agricultural input costs skyrocketing, the government must take urgent action and suspend the fuel levies to provide relief for farmers, especially the nation’s small-scale farmers, and contain food prices.
“Failure to act can only worsen the pricing pressure on consumers, compromising food security, especially for the most vulnerable in society,” he said.
Investec chief economist seconded this and added that state intervention will also be needed to soften the blow of the petrol prices.
The worst is expected for April’s petrol prices
Currently, an R2.44/litre petrol price hike is expected for April, with the price of diesel expected to increase by R3.35/litre.
According to Investec, however, a stronger rand can also soften the blow a bit from the looking petrol prices.
“The local currency continues to be supported by the view that the sharp war-induced rise in some of South Africa’s key export commodities, including coal, palladium and gold, will shield the current account against the impact of the higher oil price.
“In fact, given the magnitude of the relative commodity price increases and the weights of these commodities in South Africa’s import and export basket, the current account may even benefit.”