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South Africa fuel prices hike despite low prices globally

Reporter: Li JIingjing 丨 CCTV.com

05-05-2016 11:36 BJT

Petrol prices in South Africa have hiked again. The price of fuel has been rising since the beginning of the year despite lower oil prices. Oil prices have more than halved in the last year due to an oversupply in the market. Sumitra Nydoo takes a look at how motorists are coping.

Oil prices are still hovering just above 40 dollars a barrel due to an ongoing oversupply in the market. Most countries like South Africa that rely heavily on imported fuel supplies, have been enjoying the relief.

"Even though we had a price increase in May we are seeing fuel price deflation on an annual basis, what this means is that fuel prices are lower now that they were a year earlier and this is positive from an inflation perspective," said Jana Van Deventer, financial analyst ETM analytics.

The price of petrol has gone up twice this year, but by a marginal amount. The rand's recent recovery has helped to cushion consumers from steeper hikes.

"No doubt that the recent recover that weve see in the rand has provided a cushion for the higher brent crude prices so what happens is that as the rand recovers it either fully or partially offsets the rise in the raw input costs and that means that instead of having much more significant price increases in May in quite a small increase of 12 cents a litre," she said.

A litre of petrol in South Africa costs less than a dollar. Still low compared to other parts of the continent. But consumers say they're not happy.

"Over 1000 because im travelling to Pretoria every day, from Pretoria to here everyday," said No Super.

"It does affect us a lot, everything is going up you know, so its very difficult for us to run this business, because Im an Uber driver you know," he said.

"The petrol price increase doesn't only affect motorists and people using transport, petrol price increases usually have a ripple effect on all sectors of the economy," said Sumitra Nydoo South Africa.

"Food and things will also be increased so yes it does pose a risk to me as well, I'm a married person that stays with my wife and as our two incomes are the only incomes that we have, and everything goes up except salaries and yeah its definitely going to impact us and not in a good way," and "Yes especially these days its killing me because actually everything has gone up," said No Super.

Despite the glut in the market, the average price of petroleum products is starting to rise in international markets. Demand is increasing in Europe and in the US ahead of winter. This means there may be more petrol price hikes. But analysts believe the long term outlook for oil prices still remains low.

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