Cape Town - Deputy Minister of Finance David Masondo has warned that the conflict in Ukraine was having an impact on oil prices and this was driving up food prices.
However, Masondo said the trade relations between South Africa and Russia and Ukraine would not significantly dent the economy unless the conflict continued.
Masondo, who was speaking during the debate in Parliament on the Russia and Ukraine conflict, said they were hoping for a peaceful solution soon.
But some of the sectors have already felt the effects of the conflict with the sharp increase in oil prices.
Masondo said they were working with the Department of Mineral Resources and Energy to mitigate the impact of the high fuel costs.
“Since the conflict, there have already been sharp increases in the prices of crude oil, maize, wheat, and sunflower oil future contracts. This is likely to persist until a resolution to the conflict is found.
“Higher fuel and grain prices erode disposable incomes of consumers. Local fuel prices have risen to more than R21 per litre for the first time ever in March. This increase is due to the higher global price of crude oil, which over the last month alone, has increased to above $110 per barrel, compared to around $80 per barrel at the beginning of 2022,” said Masondo.
He said they were aware of the impact high fuel prices have on food and transport for many people.
They were trying to find mitigating factors for this.
“This, Madam Speaker, makes the work that we have embarked on with the Department of Mineral Resources and Energy to review the approach to fuel pricing that much more urgent. We are working tirelessly to complete the work as soon as possible. We cannot make any hasty decisions, as any changes we make on fuel pricing will have a lasting impact on the industry,” said Masondo.
He added that local goods exported to Russia and Ukraine were less than 1% and most of the exports were agricultural products.
The Department of Agriculture, Land Reform and Rural Development may find other markets for these products if the conflict continued.
Masondo said there had been a rally in commodity prices.
He said the risks in the export of agricultural products might be offset by commodity prices.
He said they reiterated the call by President Cyril Ramaphosa for a peaceful solution to the conflict in Ukraine. This would ensure stability in various sectors of the economy.
Political Bureau