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Fuel prices to drop next week

The price of petrol will drop by 45 cents a litre next week, the energy department said on Friday

From Wednesday, the wholesale price of diesel of 0,05% sulphur will decrease 61 cents per litre, while diesel 0,005% sulphur would decrease 60 cents per litre, the department said in a statement.

The retail price of 95 and 93 petrol would decrease by 45 cents per litre.

A major factor influencing the fuel prices was the that the average rand/US dollar exchange rate weakened relative to the previous month.

“The average rand/US dollar exchange rate for the period 26 September 2014 to 30 October 2014 was 11,1004 compared to 10,9149 during the previous period,” the department said.

Deeply indebted consumers, who collectively owe around R1,44 trillion, will get some relief with the second petrol price decrease since September.

Neil Roets, CEO of one of South Africa’s largest debt management firms, Debt Rescue, said there had been a steady decline in the ability of indebted consumers to repay loans.

“This decrease in the fuel price is going to help many South Africans who had been pushed into dire poverty by a variety of increases over the past months including an 8% hike by Eskom in the electricity price, the 0,25% increase in the lending rate imposed by the South African Reserve Bank and an above-inflation rate increase in the costs of basic necessities such as food.

“Judging by available economic data, there may be a further decrease in the fuel price if the price of Brent Crude oil continues to decline,” Roets said.

Dawie Roodt, chief economist with the Efficient Group, previously said he was delighted with the decrease and that it would bring welcome relief to hard-pressed consumers.

“It is definitely going to put a few extra rand in the pockets of consumers. Now would be a good time to pay off outstanding debts and try and build up a nest egg for a rainy day,” Roodt said.

He ascribed the decrease largely to the decrease in the price of crude oil and said further decreases in crude oil prices could be on the cards.

“The United States is close to being self-sufficient in their oil demands thanks to new technologies like shale gas extraction and reviving old oil wells with new methods of extracting remaining oil reserves.”

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