Analysts warn fuel hike will hit economy despite extended levy relief

A woman pours petrol at a station.

Analysts have pointed out that the anticipated fuel price hike in May will deal a blow to the economy despite the fuel relief measures extended by the government.

This week, the National Treasury announced an extension of the general fuel levy relief in May.

Motorists using petrol cars will continue to receive a R3 per litre relief, while those using diesel will benefit from a R3.93 cents per litre discount.

Independent Economist Elize Kruger says the upcoming fuel price increases are likely to trigger a widespread upward price shock in the economy.

She says inflation could average up to 4.6% if fuel prices remain elevated.

“ On the petrol price, the April increase will be followed by another increase of around R2 per litre next week on the 6th of May, and this is excluding any potential increase in the slate levy. Similarly, for the diesel price, the April increase of R7,37 will be followed by another increase of around R3.60 on 6 May. So, cumulatively, if you look at April and May, the petrol price is up by about R5 per litre, and cumulatively the diesel price will be up by about R11 per litre, so this remains a notable shock to the economy.”