South Africa: Petrol Retail Warning With Rising Diesel Prices

Peter Nokes, director of the SA Petrol Retailers Association, said it was possible that the price of diesel had increased by over 70 percent since last year.

However, more alarming was the fact that the cost of a tanker of petrol had increased by R106 000 from February 2007 to March this year. This would force over 5 percent of retailers to close due to the fact that they had to operate with a gross profit of less than 7 percent.

The petrol price rose by another 50c this week and the governor of the Reserve Bank, Tito Mboweni, has warned that the bank might be forced to increase interest rates by 200 basis points, or 2 percent, to fight soaring inflation.

T-Sec Group economist Mike Schüssler said the price of diesel had risen by 73,5 percent since this time last year, while petrol and paraffin had risen by 38 percent and 87 percent respectively.

The escalating fuel hikes had a direct impact on food prices, especially in South Africa where goods are transported by road. This contributed to the road freight costs leading to a secondary effect on inflation, he said.

It was clear that South African consumers were in for "serious trouble" since the fuel price had increased steadily since January, increasing consumer fuel expenses by over R240 a month, Schüssler said.

Cosatu's Tony Ehrenreich called on the government to remove tax from fuel, as it had already been proven that fuel price increases had a direct impact on food prices.

Cape Regional Chamber of Commerce president Gerald Wolman said the method by which petrol prices were determined had to be revised in the light of consecutive increases. He agreed with Ehrenreich that the tax on fuel, especially diesel, had to be reviewed.

The current system, he said, had been devised a long time ago, which was inappropriate for today's political and economic circumstances.

PetrolWorld 050608  Source : Cape Argus