Fuel price drop brings relief for motorists, impacts inflation, expert says

The latest decrease in fuel prices, which took effect at midnight on Wednesday, will provide some relief for motorists.

The Department of Energy spokesperson Thabisho Kgaditsi has announced the adjustment of fuel prices will be in effect from September 4.

The reduction in fuel prices by 92 cents for both grades of petrol, 79 cents for diesel 500ppm and R1.05 for diesel 50ppm, R1.03 for illuminating paraffin and 10 cents per kg for liquefied petroleum (LP) gas has been attributed to the rand/dollar exchange rate.

The Department of Mineral and Petroleum Resources director in fuel pricing, Robert Maake, says the stronger rand against the dollar during the period review is a factor.

Economist Dr Azar Jammine says the impact in reducing inflation is far milder than what has been experienced last month and the month before. Inflation can be dropping below 5%.

Jammine says this is also a positive development.

“The fact that the rand has strengthened has enabled inflation rate pressures to come down and we have seen as a result this fourth consecutive month of big fuel price cuts.

“The prognosis now is that the inflation rate may well fall to below 4% in the next couple of months and that will pave the way for the Reserve Bank to cut interest rates for at least half a percent before the end of the year.

This will mark the first interest rates cut “in a year and a half”, Jammine says.

IOL