South Africa removes petrol subsidy, hikes pump price

South Africa’s government has said it would end a temporary reduction in the fuel levy next month. The government also announced a 10.6% increase in the gasoline price.

The country’s the Department of Mineral Resources and Energy said government would trim the reduction in fuel levy by half, starting July 6 while it will be removed ultimatelyby  Aug. 3.

The lower concession for July will add to the impact of higher international fuel costs to boost the retail price of 95-octane gasoline to 26.74 rand in the Gauteng province, the country’s economic hub.

The wholesale price of diesel that’s used in agriculture and for emergency power generation, will rise by as much as 2.31 rand per liter, the department said. The maximum cost of illuminating paraffin, used for cooking and lighting in areas where many people do not have access to electricity, will rise by 2.21 rand per liter.

The increases will place further pressure on household finances and inflation that already breached the top of the central bank’s target band for the first time in five years in May. Fuel has a weighting of almost 5% in South Africa’s consumer price basket.

Gasoline retail costs have surged by 36% since the start of the year, increasing calls by opposition parties and labor groups for the government to deregulate the price. However, the Fuel Retailers Association has warned such a move could result in making it even more expensive for consumers.