Steep diesel hike unlikely to hammer grocery bills in South Africa
September’s sharp diesel increase could filter through to food prices, although agricultural price deflation may help cushion the impact on consumers.
South Africa's recent 11.35% increase in diesel prices is unlikely to significantly impact grocery prices, according to industry experts. Fuel costs make up between 35% and 55% of road-freight operators' operating expenses, depending on several factors. The Road Freight Association (RFA) estimates that the latest diesel hike could increase road-freight costs by 4% to 6%.
With over 80% of South Africa's food being transported by road, this could potentially raise food prices by 0.4% to 0.6%, assuming operators and suppliers pass the additional costs through fully. However, this figure is illustrative, given the differences between fuel and food costs in South Africa and the US. Research shows that transportation accounts for about 9% of the retail cost of food in the US.
Factors such as favorable weather conditions and improvements in fuel efficiency through telematics, route optimization, driver training, and vehicle technology could soften the blow on grocery bills. South Africa's reliance on imported petroleum subjects local fuel prices to international market fluctuations and currency exchange rate movements.
Written by urgent.news from IOL's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
