Dip in fuel price may lower interest rates

28 October 2014 - 02:03 By TJ Strydom
Image: Gallo Images / The Times / Alon Skuy

Motorists could see each rand roll further with the fuel price likely to come down significantly next week.

The Department of Energy will announce its monthly fuel price adjustment on Friday, and statistics from the Central Energy Fund indicate that a litre of petrol could be about 40c cheaper and diesel as much as 54c cheaper from Wednesday next week.

The petrol price was bumped up by 2c/l at the start of this month for 93 octane and cut by 5c/l for 95 octane.

Before this year the petrol price had never breached R14/l, but it has hovered above this threshold for five months of the year, squeezing consumers who also face rising interest rates.

The Central Energy Fund's statistics to October 24 indicate there has been an over-recovery of 37c/l on 93 octane and 42c/l on 95 octane.

This means the department will lower prices by the same margins on Friday if the rand and the oil price hold firm.

The drop in the fuel price could convince the Reserve Bank not to raise interest rates next month. Inflation is back within the bank's target and a lower fuel price will help keep it under 6% for the next few months.

Though the rand fell close to its lowest level last month, the oil price made up for it by dipping by more than 10%.