Fuel levy hikes ripple through economy as freight sector warns of deeper strain

The fuel levy and excise duty increases announced in the 2026 National Budget may look modest on paper, but economists, retailers and the road freight sector say the real impact will be felt in layers across the economy.

Finance Minister Enoch Godongwana confirmed that the general fuel levy will increase by 9 cents per litre for petrol to R3.96 and 8 cents per litre for diesel to R3.82. Inflation-linked adjustments were also applied to the carbon fuel levy and the Road Accident Fund levy. At the same time, excise duties on alcohol and tobacco products were raised in line with inflation.

Retail group SPAR warned that even incremental increases matter in an environment where households are already managing tight budgets. The group said fuel underpins the entire retail value chain, from farms to distribution centres and ultimately store shelves. A levy adjustment does not cause an overnight spike in prices, but it adds gradual pressure that filters through logistics systems over time.

Insurance and financial sector voices echoed this concern, describing fuel increases as regressive and particularly hard on lower-income households. With economic growth projected at just 1.6 percent in 2026, consumers are already showing heightened price sensitivity and shifting toward value-oriented products.

The Road Freight Association said the general fuel levy remains the single largest levy burdening the road freight sector. RFA CEO Gavin Kelly argued that the term “general” is key, noting that levy revenue is not ring-fenced for road infrastructure. While funds are often redirected to broader government priorities, deterioration on provincial and municipal roads outside the control of SANRAL has become increasingly visible.

Kelly cautioned that the current relief from lower global oil prices may be temporary. Once crude prices rise again, the combined effect of international costs and higher levies could significantly increase transport expenses, which will inevitably be passed on to consumers.

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On logistics reform, government’s intention to expand public-private participation in rail while retaining state ownership of infrastructure has drawn scepticism. The RFA questioned whether private operators can compete fairly while Transnet remains both infrastructure owner and rail operator.

While the Association acknowledged that the country’s overall fiscal position appears to be stabilising, it stressed that now is the time for direct investment in road maintenance, fair competition in logistics and efficient port and border operations. Without this, incremental tax adjustments risk compounding existing structural pressures on businesses and consumers alike.