Special Occasional Bulletin of Economic Notes 23/01 Review of Administered Prices in South Africa: The Petrol Price
Zaakirah Ismail, Christopher Wood
Last Modified Date:
2023-08-07, 03:26 PM
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Fuels costs are a key driver of inflation, both directly through transport costs and indirectly through their role in producing essential goods. Over the past decade, administered elements have accounted for between 40% and 60% of the final retail petrol price. The most important drivers of fuel price inflation have been the fuel levy, retail price margins and the Road Accident Fund (RAF) levy. The methodology for calculating retail price margins can be substantially improved, particularly by reducing excessive owner margins. The RAF levy is much more complex to solve, requiring a reform of the national approach to third-party insurance – but this reform is increasingly justified. Meaningful reductions in the fuel levy seem unlikely, given severe constraints on the fiscus and rising road maintenance costs.