JOHANNESBURG, July 8 (Xinhua) -- South Africa's latest fuel price cut is expected to provide only temporary relief unless global oil markets stay stable, as the country remains highly exposed to international crude prices and currency fluctuations, a petroleum industry executive has said.
"The fuel price decrease offers some much-needed relief for South Africans facing persistent cost-of-living pressures, reducing the cost of filling up and easing pressure on household budgets," Avhapfani Tshifularo, chief executive of the Fuels Industry Association of South Africa, told Xinhua in an interview on Wednesday.
Noting the latest price reduction will ease pressure on household budgets, lower transport costs and help contain inflation in the near term, he warned that geopolitical uncertainty continues to cloud the outlook.
South Africa adjusts fuel prices monthly under a regulated pricing system based largely on international crude oil prices and the rand-U.S. dollar exchange rate. As a net importer of refined petroleum products, the country is particularly vulnerable to external market shocks.
According to Tshifularo, lower fuel costs could generate broader economic benefits by reducing transport and distribution expenses, as fuel prices are a major driver of inflation in South Africa, where most goods, including food and consumer products, are transported by road.
"Cheaper fuel can lower transport and distribution costs across the economy, which may ease pressure on food prices and other essential goods over time," he said. "Motorists benefit immediately at the pumps, while businesses may also see some relief in operating costs, potentially limiting future price increases."
Industries that rely heavily on transport, including freight, retail, agriculture and e-commerce, are expected to benefit from lower prices, he said, adding that reduced logistics expenses could help ease supply chain pressures, contain input costs and support consumer spending.
Despite the latest price cut, Tshifularo cautioned against expecting lasting relief.
"While the decrease is positive, it is unlikely to provide significant long-term relief on its own," he said.
The executive noted that global oil markets remain vulnerable to geopolitical tensions, including developments in the Middle East, which could quickly push crude oil prices higher.
"For South Africa, where fuel costs influence the price of transporting goods, any sustained increase in oil prices could filter through to food prices, inflation and the overall cost of living," he said.
Tshifularo said South Africa's reliance on imported fuel leaves domestic pump prices highly sensitive to changes in international oil prices and movements in the rand-U.S. dollar exchange rate.
While government measures such as fuel levy adjustments can provide temporary support, lasting reductions in pump prices will depend primarily on stable international energy markets, a resilient rand and stronger domestic economic conditions, he added.
"Ultimately, more durable relief will require a combination of stable global energy markets and improved local economic fundamentals," said Tshifularo. ■
