Impact of third petrol price increase of Agriculture

    Comment by Dawie Maree, Head of Marketing and Information at FNB Business Agriculture.

    The price of petrol is set to increase for the third time this year; the increase will see refueling at the pumps go up by an estimated 60 to 72 cents per liter. The announcement will most likely be made on Friday, 1st December 2017.

    The increase, once announced, will be effective from the first Wednesday of December, 6th December.

    The impact on the agricultural industry will be mitigated by the mere fact that it is still high demand season, many farmers are planting at this time, therefore many will have purchased diesel in bulk in advance. The indirect impact will however be felt through increased transport inputs, which will eventually translate to the cost of goods and the transportation thereof and in the end, will be felt by the consumer end.

    The petrol increase is also unfortunate news for consumers ahead of the summer holidays and festive season. Disposable income will be directly affected as transport costs will increase. Employees in the manufacturing, construction and mining sectors normally travel back to their traditional homes in provinces such as the Eastern Cape and KwaZulu-Natal and the expected hike will definitely result in increased public transport fees. The poorest of the poor will also see a hike of approximately 75 c/liter in the price of illuminating paraffin.

    The second round effect through increased inflation will only be seen in a couple of months as the consecutive hikes in fuel prices filters through to inflation numbers.