What SA fuel levy changes mean and the implications for you

South Africans face renewed pressure at the pumps this month as petrol prices rise by R1.43 per litre, while diesel prices will decrease by R3.24 and paraffin by R5.96. The government has confirmed that temporary fuel levy relief measures will not be extended beyond June.

The increase comes at a time when households are already battling with a higher cost of living, with fuel prices affecting everything from food and transport costs to the price of everyday goods. Just last week the repo rate increased by 25 basis points.

But should motorists expect even higher fuel prices in the coming months?

Economist Dawie Roodt says the answer largely depends on global oil markets and geopolitical tensions, particularly the conflict in the Middle East, which has increased uncertainty around oil supplies.

“The good news is that there is still a realistic chance that petrol prices could come down if international oil prices stabilise,” said Roodt.

Roodt said it was never a good idea to reduce the fuel levy because the state is in trouble financially.

So how will this impact us in the long term?

“Don’t think this won’t come back to bite us. Everyone may be thinking we are getting a break, but we are not because some taxes will be increased in the future to make up for the shortfall.

“This is just cheap politics if you ask me. The issue in SA is that the economy is not growing faster. The immediate effect may be very little, and we might not even feel the levy top-ups, but it also means that the reduction in petrol price would have been greater had it not been for the fuel levy being put back,” he said.

How should households prepare for what might come in the future given the uncertainty in geopolitics?

Roodt advised households to review their budgets and plan ahead rather than wait for a financial crisis.

“People need to take ownership of their finances, have a budget and prepare for unexpected increases in living costs,” he said.

Telematics and fuel card transactions from more than 200,000 Discovery Insure clients show that motorists bought 23% less fuel in May, while fuel transactions dropped by 17%, compared to January and February.

Discovery Insure’s earlier analysis showed that litres purchased in April dropped by 35%, while fuel transactions declined by 28% after the initial fuel price increase.

These changes in driving behaviour follow consecutive fuel price increases implemented in April and May, which have put pressure on household budgets.

“These are not normal fluctuations,” says Robert Attwell, CEO of Discovery Insure. “When compared to the past few years, we rarely see fluctuations of more than 1% in fuel demand and driving behaviour. What we are seeing now reflects the real financial pressure people are under.”

While some of the factors that drove recent fuel price increases have started to ease, uncertainty remains around the fuel price outlook, including the government’s temporary fuel levy relief measures. As a result, motorists may continue to face fuel price pressure in the months ahead.