Durban – Economists have predicted a large drop in fuel prices by July as the international oil price remains depressed.
Independent economist Dawie Roodt said on Monday he expected the petrol price to decline by between 60 and 64 cents a litre, while diesel could drop by about 60 cents a litre.
“The rand has remained largely stable against the US dollar in the first half of June despite all the political shenanigans that have been plaguing our political landscape,” he said.
Chief executive of debt counselling company Debt Rescue Neil Roets said it could be a “very different” story in August if the three rating agencies decided to further downgrade the country’s rand-denominated debt to junk status.
“This could have a significantly negative impact on the currency leading to currency outflows resulting in a higher US dollar crude oil price.”
He also cautioned that the drop should not be seen as a windfall.
“We are still technically in a recession with growth well below one percent. The rand will probably decline further in value against the dollar which is going to impact on everything from fuel to food. “Consumers are already up to their necks in debt carrying a combined debt load of R1.66 trillion.
“If we see a significant rise in the fuel price in August, this is going to have a substantial impact on the prices of virtually everything and let us not forget that we are technically in a recession with two quarters of negative growth behind us.”
Independent economic analyst Professor Bonke Dumisa said there would not necessarily be other perks for consumers.
“A drop or increase in fuel costs does not necessarily mean that there will be an increase or decrease in the cost of other items.” he said. “The transport costs are not always passed on to the consumer.”
He said there would always be fluctuations in the fuel prices, dependent on several factors at play.