Fuel: big drop in price next week

2009-01-02 00:00

South Africans are in for a special gift this new year with the announcement yesterday that fuel prices will be slashed on Wednesday, sparking strong hopes that further disinflation and interest rate cuts are on the cards.

The price of petrol will drop by between R1,34 and R1,37 a litre.

This is the sixth consecutive drop in the price of petrol following a further softening of the oil price and a stronger rand during December.

This means that 95 unleaded petrol (at the coast) will now cost less than R5,80 a litre.

Announcing this, the Minerals and Energy Department said the wholesale price of diesel with a 0,05% sulphur content will drop by 167,95c, while that with a 0,005% sulphur content will decline by 165,95c per litre.

Consumer inflation has eased steadily in recent months and Dr Johan Botha, a senior economist with Standard Bank, believes the cost of transport and food will drop over the next two to three months.

“One can expect the fuel cuts to filter through relatively quickly into producer price inflation.”

He expects consumer inflation to soften to about eight percent during the first half of this year. Consumers can also expect several interest rate cuts in the coming months.

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