US sanctions could have 'devastating impact' on SA inflation
Leading economist Mike Schussler has warned South Africans that US President Donald Trump's decision to walk away from the nuclear deal with Iran could have a devastating impact on the price of fuel.
The economists.co.za founder believes increases at the pumps are inevitable after President Trump quit the Iran nuclear deal after he said the country found "definitive proof that Iran lied" about halting its nuclear program.
"It is clear to me that we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement," Trump said at the White House on Tuesday.
Trump's also announced that the US will reimpose heavy sanctions on Middle East oil producer.
According to Schussler the impact of Trump's decision will be felt through higher petrol and diesel prices, which will in turn lead to higher inflation.
"Government can't really do much cause it is a supply shock that will be instituted by the Americans, and depending on how hard they push it they might ask not to import Iranian oil, which is the oil SA has always been importing."
The Department of Energy announced another steep hike in fuel prices for May and Schussler warns that petrol to rise to R15.60 in June.
"If oil price goes up, a lot of other things will go up. Petrol and diesel will go up but also the transportation of stuff in SA is mainly over land so it does have an impact on price of goods we pay for."