One might argue that fuel prices, given their dramatic volatility, should be excluded from the inflation measure targeted by the SARB. But it is not just the volatility in the global determinants of domestic prices that has mattered for inflation pressure. Though less volatile, government-determined components of the retail price, such as the road accident fund levy, has been a faster growing component of retail pump prices, up by over 500% since 2008. The implication is that domestically determined components are an important component of the basic fuel price – sometimes representing over 50% of the retail petrol price.
Today’s post by Jan-Hendrik Pretorius shows that there is a meaningful wedge between the retail petrol price and the globally determined portion of its price, reflecting the much larger cumulative increase in domestic taxes (the road accident fund levy), transport costs and margins.
Note that basic fuel price data from the Central Energy Fund are available in EconData. Contact us at info@codera.co.za if you are interested in subscribing to subscriber-only datasets.
