South African drivers can look forward to a slight break at the pumps next week, even as the government prepares to implement an increase in the general fuel levy. Despite the planned hike, latest projections from the Central Energy Fund (CEF) show an encouraging drop in fuel prices.
The upcoming increase, announced by Finance Minister Enoch Godongwana during his budget speech on 21 May, is the first adjustment to the general fuel levy in three years. It comes as part of a broader tax reform strategy and aims to fill the funding gap left by avoiding further VAT increases.
From 4 June 2025, the levy for petrol will increase to R4.01 per litre, and R3.85 per litre for diesel. However, this bump will be somewhat offset by the month-end over-recovery reflected in CEF’s fuel pricing data.
Diesel to See the Biggest Price Drop
According to the CEF, over-recovery figures show a 52 cents per litre reduction for diesel and 20 cents per litre for petrol. Even when the increased fuel levy is factored in, prices should still fall modestly.
Here’s what motorists can expect:
- Petrol 93 and 95: drop by 4 cents per litre
- Diesel 0.05% and 0.005% (wholesale): drop by 37 cents per litre
- Illuminating paraffin: drop by 56 cents per litre (before levy)
While these cuts may seem small, they are significant during a time when fuel costs heavily influence inflation and the general cost of living in South Africa.
The Road Accident Fund levy will remain unchanged at R2.18, and the carbon fuel tax increase of 3 cents, already implemented in April, won’t impact June adjustments.
Strong Rand and Lower Oil Prices Drive Over-Recovery
The favourable pricing is largely due to a stronger rand, which has held below R18.00 to the dollar. This resilience stems more from global dollar weakness than local strength. Nonetheless, the effect has helped push down import costs for fuel.
Global oil prices have also dropped by about 15% since the beginning of the year, despite occasional volatility. A predicted supply glut is keeping crude prices low, further easing diesel prices in particular.
However, petrol is seeing an under-recovery due to oil market dynamics, though this is being offset by the rand’s strength.
SARB May Cut Rates Again Amid Positive Trends
The South African Reserve Bank (SARB) has noted that falling fuel prices are helping to pull inflation back within its target range. This creates room for another possible interest rate cut, despite uncertain global markets.
The final pump price adjustments will be officially announced by the Department of Petroleum and Mineral Resources, and will take effect on Wednesday, 4 June.
For now, the outlook is positive. Even with tax hikes looming, motorists can breathe a little easier knowing that petrol and diesel prices are set to decline.