27 May 2025
South African motorists were initially hoping for long-awaited relief at the pumps next week, with both petrol and diesel prices forecast to drop. However, the news isn’t all positive. A surprise increase in the General Fuel Levy (GFL) is expected to neutralize any benefit from the petrol price cuts, leaving consumers with virtually no reprieve — and yet another blow to household budgets already strained by rising living costs.
While diesel users can still expect a modest saving, the petrol cuts will be effectively erased once the increased levy is applied. This mixed bag of news reflects the fragile state of South Africa’s energy market and the economic pressures facing the country’s middle and working classes.
Petrol Price Decrease Overshadowed by Levy Hike
According to data released by the Central Energy Fund (CEF), the following changes to fuel prices are expected to come into effect next month:
- Petrol 93: decrease of 19 cents per litre
- Petrol 95: decrease of 19 cents per litre
- Diesel 0.05%: decrease of 50 cents per litre
- Diesel 0.005%: decrease of 50 cents per litre
While these reductions might appear promising, the unexpected increase in the General Fuel Levy will likely absorb all of the savings for petrol, effectively nullifying the drop in pump prices.
In practice, this means that motorists who rely on petrol will not see a significant difference at the pumps, despite the underlying fuel price metrics pointing to a downward trend.
What’s Driving the Fuel Price Drop?
The predicted fuel price drops were largely driven by two key factors:
- A stronger rand against the US dollar
- A relatively stable global oil price
Over the past month, the rand has gained strength amid easing political uncertainty. After fears that the Government of National Unity (GNU) would collapse over budget-related tensions, the coalition appears to have stabilized — at least temporarily. This return to political stability has restored some investor confidence, boosting the local currency.
At the same time, the US dollar has weakened due to erratic trade policies under US President Donald Trump. His pattern of imposing steep tariffs on major trading partners — only to reverse or delay them — has created uncertainty in global markets. The dollar’s decline has indirectly helped emerging market currencies like the rand.
Additionally, the oil price has remained relatively flat, despite dramatic fluctuations in April. Following a sharp drop triggered by Trump’s announcement of new tariffs on “Liberation Day,” crude oil prices stabilized at lower levels, giving importing countries like South Africa some breathing room.
Impact on Diesel Users
Unlike petrol, diesel consumers will enjoy tangible relief, with a 50-cent drop per litre for both grades (0.05% and 0.005%). This is significant for businesses and transport operators, many of whom rely heavily on diesel for logistics, mining, agriculture, and freight transport.
The 50-cent decrease could help ease cost pressures in supply chains, with potential knock-on effects for food and goods prices. However, this benefit may be marginal unless sustained over several months or complemented by broader economic reforms.
The Role of the Central Energy Fund
The Central Energy Fund (CEF) plays a critical role in monitoring fuel price indicators. It tracks variables such as:
- Crude oil prices
- International refined product prices
- The USD/ZAR exchange rate
- Fuel levies and taxes
By aggregating this data, the CEF can predict how global and local developments will impact South African pump prices. Their latest forecast reflects global pricing volatility and the fragility of South Africa’s economic recovery.
General Fuel Levy: A Tax Burden in Disguise
While the levy increase may appear minor, it comes at a time when consumers are already grappling with the cost of electricity hikes, food inflation, and slow wage growth. The General Fuel Levy, a tax collected by the government on every litre of fuel sold, has long been a sore point for motorists.
The GFL is not ring-fenced for roads or infrastructure. Instead, it goes into the general fiscus, making it a blunt fiscal instrument often criticized for disproportionately impacting the poor and working-class commuters who have no alternative to private transport.
This latest increase will likely spark public outcry, especially from advocacy groups calling for more transparency and fairness in fuel pricing.
Market Overview and Economic Snapshot
Despite the mixed fuel pricing news, the broader financial market shows signs of cautious optimism:
- FTSE/JSE Index: Up 0.91% to 94,726.12
- Top 40 Index: Up 0.94% to 87,054.57
- USD/ZAR: Down 0.84% to R17.79
- GBP/ZAR: Down 0.54% to R24.00
- EUR/ZAR: Up 0.05% to R20.24
- Gold: Up 1.24% to $3,327.63/oz
- Oil: Down 1.12% to $63.54/barrel
The strengthening rand and declining oil prices are encouraging indicators, but with fuel taxes rising and inflationary pressure building, the financial relief for consumers remains modest at best.
Conclusion: A Bitter Pill for Motorists
While headline figures may suggest falling fuel prices, the reality for South African motorists is far less optimistic. The government’s decision to raise the General Fuel Levy — even as pump prices drop — will undermine any short-term benefit and highlight the structural inefficiencies in the country’s fuel pricing system.
Unless deeper reforms are made to stabilize levies and taxes, South Africans will continue to face unpredictable and often contradictory changes at the pump. For now, any relief remains limited, fragile, and overshadowed by fiscal policies that appear out of touch with the everyday economic strain felt by millions.
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