South Africa's inflation outlook for 2026 has received a significant boost with the announcement of substantial reductions in petrol, diesel, and paraffin prices effective from Wednesday, 7 January. The Department of Mineral Resources and Petroleum confirmed that petrol 93 will decrease by 62 cents per litre, petrol 95 by 66 cents, and diesel by a notable 137 cents per litre, while illuminating paraffin will drop by 110 cents per litre at wholesale.

Inflation Relief Through the Value Chain

The price cuts are particularly significant given fuel's role as a key driver of inflation in South Africa. Beyond direct impacts on motorists, fuel prices materially affect transport and energy costs that ripple through the entire value chain to consumers. The diesel reduction is especially important as it will lower the cost of transporting goods across the economy.

"The rand appreciated on average, against the US Dollar (from 17.22 to 16.85 rand per USD) during the period under review when compared to the previous one," the DMRP said in a statement.

Global and Currency Factors Behind the Move

The department attributed the price adjustments to favorable movements in both the rand exchange rate and global oil prices. The average Brent Crude oil price decreased from $63.55 to $61.47 during the review period, with the DMRP citing "the oversupply of oil in the market" as the main contributing factor.

The paraffin price reduction brings welcome relief to poorer households that still rely on the fuel for cooking, though its use has been decreasing. This dual impact—helping both commercial transport costs and household energy expenses—positions the price cuts as a broad-based economic positive as South Africa enters the new year.