Fuel price is set to drop against stronger rand, signalling lower inflation and economic growth if sustained
BERNARD SATHEKGE HOLIDAY travelers can expect some relief at the petrol pumps in the new – year, as the price of petrol which was – threatening to hit R15 / liter could drop next Wednesday on the back of a strong rand.
But some economists are warning that consumersare, in general, in for a rough ride next year asother essential commodities continue to rise.
Motoristsare payingRI4.77 litre for 95 octanein Gautengand RIH4.48/litr e for 93 octane.At the coast,95 octane fuelcostsRH.28/litr e.The petrolprice is adjustedonthe first Wednesda yof every month.
The rand has been holding strong since the beginning of the month and is the strongest performer among emerging market currencies. Motorists are benefiting, as are consumers generally as transport is always a major component of costs.
When the local markets opened yesterday after the Christmas break, the rand inched firmer by almost247%at R12.47/$.still riding the wave of positive sentimentfollowingCyril Ramaphosa ‘s election as the leader of the ruling ANC and was als helped by a global rally in resources prices.
Althoughit is not clear how muchit will costmotoriststofill upnextmonth, the AutomobileAssociation(AA) said yesterdayit expecteda decreaseafter the hefty hike of Tle litre at the beginningofthis month. Some are predicting a mere drop of about Sc/litre of petrol and Te/litre decline in the diesel price.
Econometrix economist Laura Campbell said: “The rand strengthening is a positive sign e for fuel and such a development, if sustained, will feed into lower inflation and therefore lower interest rates. Which in turn will be positive for economic growth.\
“But Neil Roets, CEO of debt consultancy Debt Rescue, warned yesterday that although the petrol price was likely to come down reality was that South African consumers were in for a tough 2018.
“With major price increase for food and other essential commodities on the cards as well as continued sluggish growth, South Africans are in for tough times in 2018.
“Unemplo ymentis nowat 27.7%and keyemploymentsectorsincludingmining andindustr y are expectedto continue sheddingjobs at unprecedented rates.” he toldThe New Age.
Roets said one of the key factors putting consumers underpressure earlyin the year was that they tend to “blow everything” during the festive season and forget to savefor the new year.
“Most consumers don’t budget properly for the new year, despite being paid bonuses.A lot of companies are still paying bonuses but they tend to be spent in the wrong way.Now with some food prices going up, this is going to bite deep.” Roetssaid.
“Our statistical analysis of debt shows that consumers will notch up record levels of debt in the new year. It’s sad that we have to be so pessimistic a happy time of the year, but the sooner consumers realise that the economy is in trouble and tighten their belts, the fewer will have to come to us to bail them out,” Roets said.
He said experience over time had shown that January was the month of the “great reckoning” when chickens came home to roost. However, he said Cyril Ramaphosa ‘s election as ANC leader should result in greater political and economic stability followed by some foreign direct investments. bernards\athenewage.co