Fuel price likely to drop in early July

In what is sure to come as a relief to many, the Automobile Association (AA) is predicting a sharp decrease in fuel prices come July.

According to the AA, petrol is expected to drop by 90c/l, diesel will go down by 70c/l and illuminating paraffin by 62c/l.

A similar prediction has been made by the Central Energy Fund who’s whose data shows a decline in the basic fuel price.

While there are a large number of factors that go into determining the lower price, two major ones are the decreased value of crude oil worldwide and the stabilisation of the rand against the US dollar.

According to FNB Consumer CEO Dr Christoph Nieuwoudt, the drop in fuel prices will be a big benefit to SA households.

“Transport accounts for a large portion of consumers’ spending whether one uses public transport or a private car. Following a spate of steep fuel increases in the first half of this year, many consumers will be looking forward to some financial relief to finish the year in a better position,” Nieuwoudt said.

There’s even more good news, however. The SA Reserve Bank (SARB) monetary policy committee (MPC) is expected to announce its decisions on interest rates in July and economists are optimistic about a possible rate cut.

“Interest rates have been stable for some time, giving consumers a level of certainty in terms of servicing debt and accumulating savings.

“A rate cut in the short term will be a good incentive for consumers to rework their budgets, reduce reliance on debt by paying more or boosting their capacity to save,” said Nieuwoudt said.

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