SA fuel price to drop 18%

JOHANNESBURG – South African petrol pump prices will fall by about 18 per cent next week to the lowest since March 2007 due to a drop in the international oil price, helping to ease inflation.

A statement from the minerals and energy department on Friday said the most widely used 95 octane petrol would drop by R1.34 a litre on January 7 to R6.01 in the main commercial hub of Gauteng from R7.35 previously.
Wholesale diesel prices will fall by about 20 per cent.
South Africa is a net importer of oil and adjusts its fuel price monthly, taking into account changes in the rand currency, oil price and government levies.
The DME said the international price of petrol, diesel and paraffin had decreased during the period under review while the rand had strengthened against the dollar.
With the fuel price decrease, consumers will pay the lowest price since March 2007 for petrol while diesel will be at its lowest since August 2007.
‘That is a huge decline. I cannot quantify it right now but it should ease pressure on transport costs and inflation,’ said Isaac Matshego, economist at Nedbank.
‘We are expecting inflation to fall rapidly and this should add to the pace of the decline but it is not likely to be significant.’ A big chunk of household expenditure is on food and transport costs, which have been the main drivers of inflation.
The targeted CPIX inflation, which the central bank wants to keep between 3 and 6 per cent, peaked at an annual rate of 13,6 cent in August, and eased to 12,1 per cent in November.
The central bank cut interest rates by 50 basis points on December 11, partly citing the improved inflation outlook and a sluggish economy. It said inflation would likely come back to its target in the third quarter of 2009.
Most analysts believe the central bank may be more aggressive in easing monetary policy in the new year. – Reuters