Middle East crisis triggers fuel hikes, inflationary fears in South Africa

JOHANNESBURG, March 4 (Xinhua) -- As tensions in the Middle East intensify, pushing oil prices higher and weakening South Africa's currency, economists have warned of mounting inflationary pressures in Africa's most industrialized economy. Read full story JOHANNESBURG, March 4 (Xinhua) -- As tensions in the Middle East intensify, pushing oil prices higher and weakening South Africa's currency, economists have warned of mounting inflationary pressures in Africa's most industrialized economy. The rand has depreciated by more than 1 percent since airstrikes against Iran over the weekend, amid escalating hostilities involving the United States and Israel. By Wednesday, the local currency was trading at about 16.34 against the U.S. dollar, a marked weakening from its closing level on Friday. Meanwhile, Brent crude oil prices rose to around 83.50 U.S. dollars per barrel. "When the price of oil rises, the pump price of petrol in South Africa follows. Whether you are flying or using any petroleum-reliant product, costs will increase," noted analyst Sandile Swana. "Logistics and transport are almost universal dependencies; it is unlikely South Africa will be spared from energy-driven inflation." South Africa's Department of Mineral and Petroleum Resources adjusted domestic fuel prices on a monthly basis, taking into account international oil prices and the rand/dollar exchange rate. Effective Wednesday, the department implemented a 20-cent-per-liter increase in petrol prices and raised diesel prices by between 62 and 65 cents per liter. Economists warn these increases typically filter through to higher transport costs and food prices. "Farms rely heavily on diesel for production. As a result, the prices of commodities, especially staple foods, will likely rise over time," Swana added. While millions of consumers face rising costs, the mining sector, particularly gold producers, stands to benefit from the weaker rand. Swana noted that the National Treasury also gains, as a significant portion of mining profits returns to the state through various taxes without the government incurring additional costs. Follow us on our official WhatsApp channel for breaking news alerts and key updates! Report a mistake What is the issue about? Spelling and grammatical error Factually incorrect Story is irrelevant This field is mandatory. Please provide details of the report. Email (optional) Please enter valid email. Report issue Cancel Invalid captcha response. Please re-try again. Thank you for your report!