Fuel price drops 85-89 cents
03 July 2012 | CITIZEN REPORTERS
JOHANNESBURG - Efficient Group economist Merina Willemse said yesterday that the oil price was expected to stabilise at between $80 and $90 per barrel towards the end of the year, which is good news for fuel prices.
This, together with a currently stronger rand, would indicate a further drop in fuel prices for next month, and the trend could continue until the end of the year.
But Willemse warned that sudden crises like further instability in Iran could put a stop to the price decreases.
A drop in fuel prices is also good for the consumer in other ways and may cause inflation to stay below six percent, said Willemse.
She described the downward trend in fuel prices as a “natural band-aid on a wound” for a battling world economy.
Laura Campbell, economist at Econometrix, said the drop in the fuel price will bring huge relief for the man in the street.
“The 89c decline in the fuel price is good news for consumers in that it is going to reduce inflation and provide growth in disposable income.
“This decline in the petrol price will reduce the Consumer Price Index (CPI) inflation rate for July by 0,2% given that petrol has a weighting of 3,93% within overall CPI.
“It looks like the CPI inflation rate will remain in the target band in July.
This represents relief for the pockets of ordinary people and will boost consumer spending at the margin.
“But it all depends on what happens in the Eurozone.
“At present consumers are likely to benefit from an additional cut in petrol prices in August, although this may not be as great as the cut in July,” Campbell said.
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