Diesel price set to rise sharply in August

Farmers are in for a tough August due to an under-recovery of about 48c/ℓ in the diesel price, according to unaudited mid-month fuel data of the Central Energy Fund.

Diesel price set to rise sharply in August
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Illuminating paraffin is experiencing an under-recovery of 47c/ℓ, while the ULP 95 petrol price shows an under-recovery of 7c/ℓ and ULP 93 an over-recovery of about 1c/ℓ.

According to the Automobile Association (AA), the current trajectory showed that all fuel types would be more expensive in August, with the increases most probably being higher than the current data indicate.  The AA identified the rand’s relatively flat performance against the dollar as the main contributor to increased prices.

Dawie Maree, head of agriculture information and marketing at FNB, said the rand had strengthened slightly over the past couple of days, and would be able to alleviate the impact of the higher oil price if it maintained its current level for the next two weeks.

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He added that a higher diesel price would have a negative impact on farmers, as many in the summer rainfall region were still harvesting their crops.

“Some farmers buy diesel in advance, but diesel prices were also subjected to a price hike last month.”

André Kirsten, vice-chairperson of the Grain SA’s Winter Grain working group, said an increase in the diesel price in August would not have a major effect on the winter grain region, as the harvesting season would only start from mid-September.

“We’re spraying now, but the fuel-associated costs for doing this are much lower than for harvesting. We hope prices will come down by September.”

Maree said that the high diesel price would also affect the cost of transport, which would put pressure on consumer prices. However, he did not think this would have a major impact on food inflation.