The Automobile Association (AA) has warned of a possible petrol price increase of up to R4.58 a litre in November, citing early data from the Central Energy Fund (CEF). The organisation has called for a R3-a-litre cut in fuel taxes to ease pressure on households, businesses, and public-transport users. According to the AA, this cut could help mitigate the impact of rising fuel prices on inflation.
The AA condemned the fuel price increases that took effect on October 7, which pushed petrol and diesel prices to their highest levels on record. The organisation's call comes amid concerns over the Road Accident Fund's (RAF) financial position, with its annual report reportedly including a request to increase the RAF levy on petrol and diesel. The levy currently stands at R2.25 a litre, following a seven-cent increase in April.
Bobby Ramagwede, chief executive of the AA, questioned the prospect of increasing the RAF levy while consumers face higher fuel costs, inflationary pressure, and rising expenses for essentials. He expressed concern over the potential impact on low-income workers, who already spend a significant portion of their pay on transport. Ramagwede argued that the government should consider reducing fuel levies rather than increasing them.
The AA acknowledged that the National Treasury introduced temporary fuel levy relief in April, cutting fuel levies by R3 a litre at a cost of approximately R17 billion. However, it argued that the relief should have formed part of a longer-term strategy to protect consumers against rising fuel prices. The organisation challenged Finance Minister Enoch Godongwana's position that further fuel price relief could increase pressure on taxpayers or government borrowing.
The AA warned that further fuel price increases could push consumer inflation above 5%, potentially delaying interest rate relief for households servicing debt. It also highlighted the sharp increase in diesel prices, which have risen from about R17 a litre in January to more than R34. Early CEF data indicates a possible further wholesale increase of between R2.56 and R2.91 a litre in November.
The AA called on the government and employers to consider several measures to mitigate the impact of rising fuel prices. These include implementing a further R3-a-litre reduction in fuel taxes, conducting a public review of the basic fuel price formula, and rebuilding the country's strategic fuel reserves. Employers were urged to review transport allowances and consider allowing one remote-working day a week where operationally possible.
Ramagwede emphasised that mobility is essential for freedom and economic opportunity, and that every rand added to a litre of fuel comes out of that freedom. He argued that the government can afford to cut the general fuel levy by R3 a litre, which would materially reduce the inflationary impact of fuel price changes. The AA outlined its proposals as October marks Transport Month, with Ramagwede stating that South Africans are marking it by paying more to move than they ever have.
Key points
- The Automobile Association warns of a possible petrol price increase of up to R4.58 a litre in November.
- The organisation calls for a R3-a-litre cut in fuel taxes to ease pressure on households and businesses.
- The AA proposes several measures to mitigate the impact of rising fuel prices, including rebuilding the country's strategic fuel reserves and reviewing transport allowances.
