Petrol jumps R3.33 a litre and economists warn the repo rate could rise again in November

Petrol rose by between R3.12 and R3.33 a litre on Wednesday and diesel by between R2.84 and R3.24, and the first serious question is not what it costs to fill a tank. It is what the increase does to interest rates.

As IOL reported on 8 October, Investec chief economist Annabel Bishop said the increases were likely to push CPI inflation back towards 5% year on year and could fuel another hike in the repo rate in November. Her warning rests on two things moving at once: the fuel price itself, and the oil price behind it.

Bishop linked the pressure to the war in the Middle East, pointing to market concern about the effect on oil, petroleum products and oil feedstocks as the conflict intensified and the risk of it spreading grew.

Inflation came in at 4.4% in August, a slight increase on July. Transport costs within that basket were up 8.8% year on year, which is the line item a fuel increase hits first and hardest.

Another 0.25 percentage point hike is being priced in for the remainder of the year, Bishop said. The repo rate is what the South African Reserve Bank charges commercial banks, and it sets the floor under what those banks charge households. Prime currently sits at 10.75%. A quarter-point move takes it to 11%, and the cost reaches households before they next fill a tank.

The arithmetic is not dramatic per household and it is relentless. On the figures supplied, a R1.5 million home loan over 20 years would move from about R15 228 to R15 483 a month, an extra R255. A R500 000 car financed over six years would move from about R9 453 to R9 517, an extra R64. A household carrying both would pay about R319 more a month before the higher fuel, transport and food costs are counted at all.

That lands on a country where the Reserve Bank’s latest Quarterly Bulletin puts household debt at 62.2% of disposable income in the first quarter, with the cost of servicing that debt at 8.4%. Among consumers already under pressure the position is worse. DebtBusters’ 2026 Money-Stress Tracker, drawn from almost 18 000 respondents, found 53% were spending more than 40% of take-home pay on debt repayments, up from 48% the year before. Among those taking home more than R20 000 a month, 75% were spending more than the recommended 30% on debt. Among those earning more than R50 000 a month, the tracker found they would theoretically be paying out more than they take home.

The fuel price is also a freight price. The Road Freight Association says fuel accounts for roughly 35% to 55% of a road-freight company’s operating costs, and on the September diesel increase it estimated operating costs could rise by around 4% to 6%. More than 80% of land-based freight in South Africa moves by road, including food travelling between farms, processors, distribution centres and retailers.

For a motorist the increase is immediate and easy to measure. A 30 litre refuel in a small car costs about R100 more. A larger tank takes another R200. Running costs rise by between 19 cents and 32 cents a kilometre depending on the vehicle.

What happens after the pump is less certain, and this is where the picture is more complicated than a straight line from diesel to shelf price. PSG senior economist Johann Els said there had so far been very little visible feed-through from higher petrol and diesel into food and other consumer goods, and noted that food inflation had come down from earlier in the year. Els described a substitution effect: households that must spend more on fuel and transport have less to spend elsewhere. Wholesalers and retailers may absorb part of the increase rather than pass it on and risk losing sales volumes. Higher fuel costs, on his reading, can generate deflationary forces as much as inflationary ones.

There is a limit to how much comfort that offers. The Pietermaritzburg Economic Justice and Dignity Group’s Household Affordability Index puts the average cost of a food basket at just under R5 500, up 2% year on year, with the foods bought first and prioritised in the household basket up 2.9%.

So the honest position is two pressures pulling in opposite directions. The fuel price is feeding transport costs, the transport line in the inflation basket is already running at 8.8%, and the Reserve Bank’s November decision now carries a live chance of a quarter-point increase. Against that, food inflation has eased, retailers are absorbing margin rather than losing customers, and consumers who spend more on petrol spend less on everything else.

What a household can act on is narrower than either argument. Debt at 62.2% of disposable income is a national figure, and the DebtBusters sample shows how many households are far past it. A R319 a month increase is small against a R15 000 bond payment and it is not small against a budget that is already over. The next date that matters is the November repo rate decision.

Source: IOL, Fuel price shock could push inflation higher and put rate hike in focus