Fuel price relief in September

South African motorists will get some relief at the pumps in September, with petrol and diesel prices set to fall from midnight on Wednesday.

In a statement issued on Monday afternoon, the Department of Mineral and Petroleum Resources announced that petrol will drop by 4 cents a litre, while diesel will decline by 56 cents.

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September marks the second consecutive month of petrol price cuts, while diesel shifts direction after a 65 cents per litre increase in August.

Lower oil prices and a stronger rand

During the review period, the average Brent crude oil price declined from $69.06 to $67.01, driven by higher production from Opec [Organisation of the Petroleum Exporting Countries] and non-Opec producers, a weaker global growth outlook, and the impact of tariff uncertainty.

In addition to lower Brent crude prices, the rand appreciated slightly against the dollar – from R17.76 to R17.73 – “cushioning” prices by almost 2 cents per litre on all products, the department noted.

Read: Rand, stocks make history with bumper August gains

Inflation outlook

Lower fuel costs also feed into the domestic economy. July inflation came in at 3.5% – the highest in 10 months – and softer fuel prices may help ease pressure on households.

The relief may, however, be only temporary.

Casey Sprake, economist at Anchor, noted earlier that inflation is on an upward trajectory, with food inflation the main source of pressure. Annual inflation for food and non-alcoholic beverages rose to 5.7% year-on-year in July, up from 5.1% in June, driven by increases in meat, vegetables and other food categories. Meat prices, especially beef, surged 10.5% year-on-year in July – the fastest rate since early 2025.

Read: How key economic events affect rand/dollar volatility

Even though fuel prices remain lower compared to a year ago, geopolitical risks are an “ever-present” threat that could push costs higher, according to Sprake.

Rates steady

The higher inflation trajectory comes as South Africa’s National Treasury and the South African Reserve Bank (Sarb) signal they are finalising a review of the current inflation target range of 3% to 6%, which has been in place for more than two decades.

In a statement issued on Monday, Treasury said an announcement will be made “as soon as is practically possible” following the technical work by a joint panel, the Macroeconomic Standing Committee.

This follows Reserve Bank governor Lesetja Kganyago’s repeated argument that a 3% anchor would provide greater long-term benefits than the current 3% to 6% range.

Adrian Goslett, regional director and CEO of RE/MAX Southern Africa, noted in a statement that the central bank’s next interest rate decision, due on 18 September, will hinge on domestic inflation and the US Federal Reserve’s rate decision 0n 17 September.

The Fed is widely expected to deliver a 25 basis point rate cut at the meeting, with further reductions likely over the following three to six months. Downside risks to the labour market and a significant slowdown in economic activity are key factors supporting the case for additional easing.

Goslett says if South Africa’s inflation stays closer to the Sarb’s preferred 3% level, there is still hope for a rate cut. On the other hand, a renewed acceleration would strengthen the case for holding rates in September at the current 7%.

Read: SA inflation climbs, reducing chance of rate cut

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