South Africa Fuel Prices at 2-Year Low, Boosting Inflation Outlook

AFRICAN BUSINESS AND ECONOMYOctober 3, 2024 at 10:26 AM UTC

TLDR

South African fuel prices dropping significantly, reaching a two and a half year low on October 2, positively impacting inflation outlook.
Retail price of 95-octane gasoline in Gauteng falling to 21.05 rand per liter, 18% lower than the previous year, while diesel prices will see a 26% decrease.
Decrease attributed to lower international oil prices and stronger rand, aiding in easing inflation expectations and potentially leading to a further decline in annual inflation rate.

South African fuel prices are set to drop to their lowest level in over two and a half years on October 2, improving the country’s inflation outlook.

The retail price of 95-octane gasoline in Gauteng will fall to 21.05 rand ($1.23) per liter, an 18% decrease from October last year. Diesel prices will be 26% lower. The decline is attributed to lower international oil prices and a stronger rand.

With fuel making up nearly 5% of South Africa’s inflation basket and indirectly influencing other consumer goods, the price drop is expected to ease inflation expectations. Annual inflation slowed to 4.4% in August, and the central bank forecasts a further decline to 3.6% in the last quarter of this year.

Key Takeaways

South Africa's fuel price drop signals potential relief for consumers and a positive inflation outlook. Lower fuel prices, driven by cheaper oil and a stronger rand, are expected to help sustain the country’s inflation rate below the central bank’s target range midpoint. This could provide additional support for household consumption and aid the country’s economic recovery, especially with inflation forecasted to drop further in the coming months.

South Africa

Fuel Prices

Inflation

SARB

Interest Rates

Consumer Prices