Projected drop in diesel price – benefits

The expected fuel price decline of around 49 cents a litre in August predicted by the AA is good news‚ but it is the anticipated decrease in the price of diesel of 70 cents a litre that will substantially benefit consumers.

“Everything we consume is transported by trucks that guzzle vast amounts of diesel. If retailers play the game and pass on the reduced transportation costs we could be looking at a reduction in the price of food and most other goods‚” Neil Roets‚ CEO of debt management company Debt Rescue said in a statement.

“It might even throw a lifeline to Eskom‚ who use large amounts of diesel to keep their gas turbine generators going to help fill the shortfall of electricity in the grid.”

This decrease‚ however‚ may be of a very temporary nature as the Rand is taking a hammering‚ having decreased in value against the dollar by more than 10% since the beginning of the year‚ he cautioned. “This past week alone it has dropped by more than 1‚5%.”

Roets also warned that other economic indicators remained largely negative and consumers should understand that this was not a windfall that should encourage going on a spending spree.

“It is belt-tightening time for the storm that might hit us later this year‚ as there is almost certainly going to be another interest rate hike. It is also a given that if the Rand keeps trading at its current level we are going to be looking at a substantial fuel price increase next month.

“Some major issues affecting deeply indebted consumers remain‚ such as the fact that consumers collectively now owe around R1‚6-trillion and the fact that more than half of all borrowers are now three months or more in arrears with the payment of their bills.

“The total debt that consumers stacked up during the past several years when unsecured credit was easy to obtain remains a major burden for many. This would be a good time to repay as much of this credit as possible rather than going on a spending spree.”

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