Petrol price hike will weigh on business, says Busa
THE increase in fuel prices this month will lead to a natural rise in the cost of doing business, which will particularly affect small to medium enterprises, said business lobby group Business Unity SA (Busa).
The petrol price will rise by just more than 90c/l at midnight on Tuesday, while diesel will cost over 60c/l more.
Busa noted that although prices could still decrease in the future, such decreases usually took time to filter through into the economy.
The combined impact of cumulative administered prices would also continue to add to inflation pressures, Busa said.
Despite the fuel hikes, Busa expected the Reserve Bank’s monetary policy committee (MPC) to keep lending rates on hold at its meeting later this month.
"With the inflation outlook likely to start deteriorating once the effects of the weaker rand and higher food and oil prices start to filter through, we think that the MPC will keep interest rates on hold rather than ease further," it said.
Busa said despite weak fundamentals, oil prices continued their upward trend driven by supply concerns. The market had refocused on the possibility that conflict in the Middle East could disrupt oil flows, Busa said.
"Additionally, the Syrian conflict has raised concerns of further intensification," the business organisation said.
More in this section
- Platinum jitters as turf war flares in Marikana
- Bungling at Icasa in the spotlight
- Why Fastjet failed to take flight
- Sasol Chemical Industries claims contested at Tribunal
- Private sector ‘must honour commitment to economic inclusion’
- More than 15,000 tax practitioners need to find new professional home