A DECREASE in the petrol price of 28c/l from Wednesday next week, due to an improved rand against the dollar and lower oil prices, is expected to offer some relief to deeply indebted South African consumers.
The Department of Energy also said on Friday that diesel would drop 15.2c/l on November 6, after the firmer exchange rate of R9.93/$ in October contributed to a decrease of 4c/l in the basic fuel price.
The department said the main reasons for the strengthening of the rand against the dollar were the termination of the US government shutdown as that country’s political parties agreed to increase the US debt ceiling. The expectation that the US Federal Reserve would maintain its current level of economic stimulus also added to the healthier picture. In South Africa, there was an improved outlook on the resolution of labour-related disputes.
"The rand was further boosted by positive data from manufacturing and mining output, retail sales, motor sales and quarterly unemployment in the country," said the department.
The oil price decrease of an average of $3 a barrel also helped — the price went to $109 last month, from $112 in September.
Anticipated positive discussions between Iran and the US, UK, France, Russia and China on Iran’s nuclear programme will "hopefully lead to the easing of international sanctions against Iran’s oil exports", said the department.
Meanwhile, Saudi Arabia is producing crude oil at its fastest pace in three decades and the US is pumping its most crude oil since 1989.
The increase in North Sea crude oil production after the completion of seasonal maintenance on oil fields, despite low levels of crude oil exports by Libya, is another positive factor for prices.
But Debt Rescue CEO Neil Roets said on Friday that while price decreases of this magnitude were to be welcomed, "consumers should not see this as an opportunity to stack up even more debt".
Petrol prices in South Africa are notoriously volatile as the rand continues on a roller-coaster ride linked to the stimulus the US is injecting into the market, but which it intends tapering soon.
According to the National Credit Regulator’s Consumer Credit Market Report, the total outstanding gross debtors’ book is sitting at R1.47-trillion. This represents money owed by consumers in the form of mortgages, vehicle finance, credit cards, store cards, personal loans, short-term loans, and pension- and insurance-backed loans.
Of the 20-million credit-active consumers in South Africa, more than 9-million are not paying off their debt after three months, with high vehicle maintenance and petrol costs some of the items most affecting personal balance sheets.
© BDlive 2013