Diesel prices have risen by 79% over the past three months as the new price hike took effect on 6 May 2026, with significant consequences for inflation and interest rates.
This rise in absolute terms is just below R14 per litre, with diesel 0.005% sulphur rising from R17.58 per litre at the end of January to R31.88 per litre from 6 May.
Stanlib chief economist Kevin Lings said there is simply no avoiding this price hike, with it likely to ripple throughout the economy.
Lings explained that there is very little the Reserve Bank can do about this type of inflation, as its tools are limited to reducing demand rather than increasing supply.
Simply put, the Reserve Bank cannot drill for more oil or increase refining capacity. All it can do is slow spending to prevent high inflation from becoming entrenched.
Lings expects inflation to rise from the current 3.1% level to over 5% when April’s data is released later this month. This is not include the second huge hike in petrol and diesel prices instituted from 6 May.
Worryingly, inflationary pressures are likely to get worse as the conflict in the Middle East is prolonged and government relief programs come to an end.
In the worst-case scenario, inflation could rise to 7% or more if oil prices remain elevated and the government’s relief measures end.
This will push the Reserve Bank to act by hiking interest rates, which will slow consumer spending and economic growth.
“If you look at the diesel price over the past three months, including the hike on 6 May, it is up 79% in just 90 days. That is a monster increase,” Lings said.
“Obviously, that has to feed into a price effect somewhere in the economy and most likely throughout the economy.”
“We are not capturing any of that. None of that is being captured in the current inflation data. Clearly, if you get further increases, it will just push inflation even higher.”
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This article is published on Business Point website
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Updated: May 2026
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