After a reprieve at petrol pumps in January, South African motorists could see another sharp rise in February due to higher international oil prices, according to economists from the Bureau for Economic Research (BER).

After a tumultuous first week of trading in 2022, global stock and bond markets have been calmer over the past week. There was more commodity action, with one-month Brent crude oil futures ending the week up more than 5%, the group said in a research note on Monday (January 17th).

“A combination of oil demand that has held up despite the surge in Omicron-induced Covid infections (particularly in the US) and supply disruptions has pushed up the price of oil,” he said. -he declares.

“After some respite on the domestic fuel price front in January, the further rise in oil prices is expected to lead to another sharp increase in fuel prices in February.”

Price increase

The focus will also be on inflation data this week ahead of the Reserve Bank of South Africa’s interest rate decision on Jan. 27, the BER said.

“We expect the headline CPI to rise 5.8% yoy (consensus is 5.7%), up from 5.5% in November. This is courtesy of an expected rise of 0 .4% m/m, driven by the rise of more than 70c/litre in the price of petrol and diesel at the start of this month, as well as the quarterly rental cost survey.

“Due to the seasonal rise in meat prices, the food category is also expected to contribute to the overall monthly CPI increase.”

South Africa is expected to see at least three interest rate hikes in 2022 as the South African Reserve Bank (SARB) has signaled it will start easing its accommodative monetary policy, according to economists at Momentum Investments.

In a Jan. 4 research note, the group said the SARB’s quarterly projection model calculates a steep interest rate hike cycle – resulting in interest rates of 5.75% by the end. 2023 and 6.75% by the end of 2024.

“In our view, well-contained inflation, anchored inflation expectations and a sluggish growth outlook argue for a more subdued interest rate hike cycle,” Momentum said.

“We expect the SARB to raise interest rates three times by a cumulative 75 basis points in 2022 and three times by an additional 75 basis points in 2023.”

Electric ride

South Africa’s national energy regulator (Nersa) is also expected to table its 2022/23 price determination in parliament in late February or early March.

Eskom’s chief financial officer, Calib Cassim, has confirmed that the electricity utility has requested a 20.5% electricity price increase for its 2023 financial year, which is expected to come into effect on April 1, 2022.

On March 5, 2021, Nersa approved a 15.06% hike for direct Eskom customers, which was then implemented on April 1, 2021. A 17.80% hike for municipalities was implemented July 1, 2021.

Cape Town Mayor Geordin Hill-Lewis warned that similar increases would simply be unaffordable for most South Africans this year.

“Like the majority of South Africans, many Capetonians struggle to make ends meet. The pandemic and nationwide lockdown have resulted in the closure of hundreds of businesses in our city and the loss of thousands of jobs. Our residents are reeling under the burden of rising costs for energy, fuel, food and basic consumer goods.

“The consumer price index (CPI) is currently 5.5%; this would have been a more reasonable rate increase for Eskom. The price of electricity has increased by 307% over the past 13 years, far exceeding inflation. Despite paying more for electricity, South Africans have experienced an unreliable electricity supply – 2020 and 2021 have been two of the worst load shedding years on record.


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