Zuko Komisa
- The R3 per litre general fuel levy reduction is extended through June 2026 to combat rising costs driven by the Middle East conflict.
- To counter sharp price spikes, the diesel levy will be scrapped entirely (reduced to zero) from 6 May until 2 June.
- Relief will be halved in June before the full levy is reinstated on 1 July, ensuring the R17.2 billion cost remains fiscally neutral.
The National Treasury and the Department of Mineral and Petroleum Resources have confirmed that the temporary fuel levy relief, initially set to expire in May, will now continue into June. This move aims to shield households from the economic shock of soaring global oil prices and to prevent a significant spike in domestic inflation.
But what does this mean for inflation, household budgets, and the Reserve Bank’s rate path?
Kaya Biz recently spoke to PSG Chief Economist Johann Els who explained that for the month of May, the petrol levy remains at R1.10 per litre. However, in response to severe pressure on the logistics and transport sectors, the relief for diesel has been increased by 93 cents.
This effectively reduces the diesel fuel levy to zero until 2 June, providing a critical buffer for economic growth.
The exit strategy involves a phased approach to avoid a sudden price “cliff” in July. During June, the relief will be tapered to R1.50 per litre for petrol and R1.96 for diesel.
By 1 July, the levies will return to their standard rates of R4.10 and R3.93 respectively.
Despite the R17.2 billion price tag in foregone revenue, the government maintains that the measure is revenue-neutral.
Funding will be sourced from higher-than-anticipated tax receipts and departmental underspending, ensuring no breach of the 2026 Budget framework. Meanwhile, a formal review of the fuel price calculation formula is currently underway, with a conclusion expected by March next year.
Listen to the full conversation here:
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