Retail prices of fuel jumped this week by up to nine percent after the government scrapped kerosene and diesel subsidies 

The Department of Mineral Resources and Energy (DMRE) officially announced on Tuesday that all grades of petrol and diesel prices will be increased from Wednesday onwards.

The petrol price will be increased by 37c(south african cents) per liter while the diesel (0.05% sulphur) has been increased by 72 cents per liter.

Whereas, Diesel (0.005% sulphur) and wholesale illuminating paraffin - both increased by 71 cents and Single Maximum National Retail Price for illuminating paraffin got increased by 95 cents. The Maximum Retail Price of LP Gas, on the other hand, has been decreased by rand 1.61.

The department explained the reason behind this increase, noting that the average Brent Crude oil price increased from $75.10 to $79.75 USD.

"The average international product prices of petrol, diesel, and Illuminating paraffin followed the increasing trend of crude oil prices during the period under review," the department added, SA News reported. "These led to higher contributions to the Basic Fuel Prices of petrol, diesel, and illuminating paraffin by 63.59 c/l, 99.09. c/l and 98.71c/l, respectively."

DMRE noted that the LP Gas prices has been decreased, thanks to low-priced Propane and Butane. The department pointed out that the South African local currency, and appreciated on average, against the US Dollar.

"This led to lower contributions to the Basic Fuel Prices of petrol, diesel, and illuminating paraffin by 27.64 c/l, 27.36 c/l, and 27.10 c/l, respectively," as per the department. "The cumulative slate balance on petrol and Diesel as at the end of June 2023 had a positive balance of is R2.69 million."

DMRE noted that this is the reason why no slate levy is applicable in the petrol and diesel price structure for August 2023.

The development came three months after the department announced a dip in diesel price by 73 cents (south african cents) per liter. However, the prices of both grades of petrol had increased by 37 cents per liter even in May.

At that time, the department shared that the average Brent Crude oil price increased from 79.24 U.S. Dollars (USD) to 82.20 USD.

Last month, President Cyril Ramaphosa encouraged South African manufacturers to build more electric vehicles in order to support decarbonization, giving an example of the European Union which has decided to ban the sale of new petrol and diesel-powered motor vehicles from 2035.

According to the President, the government, business owners, and laborers should come together in order to create electric vehicles, which will eventually help to secure South African automotive manufacturers' future.

Considering the South African currency, Rand hit a new low in May after the Reserve Bank increased the interest rate to a 14-year high, 8.25%.

South Africa's Reserve Bank announced last month that Monetary Policy Committee (MPC) has decided to keep the interest rate locked at 8.25 percent.