Siseko Njobeni
1 December 2008
Johannesburg — WEDNESDAY's big drop in fuel prices will put approximately R2,3bn into the hands of South African households, business and the government, according to an economist.
In line with the forecasts of several economists, the minerals and energy department announced on Friday that petrol, diesel and paraffin prices would drop on Wednesday. The retail price of petrol would fall by 161c/l, the department said.
Economist Tony Twine said on Friday the decrease was the biggest so far seen in SA. Paraffin would decrease by 75c/l, 0,05% sulphur diesel by 81c/l and 0,005% diesel by 80c/l.
Twine said the fall in fuel prices was likely to ease the rate of inflation.
This comes as inflation shows signs of subsiding, igniting hopes of an interest rate cut. Data last week showed the CPIX inflation rate slowed to 12,4% in October from 13% in September.
Twine said the decreases would have substantial economic benefits for South Africans. "If you take the combined petrol, diesel and paraffin average consumption over a long period, approximately R2,3bn will be available for the economy to spend on goods and services other than fuel.
"About one third of the R2,3bn will be in the hands of households and half in the hands of business. One sixth will go to government. For every month that the price of fuel does not go up, there are economic benefits," Twine said.
The department has attributed the decreases to the falling international crude oil price.
The weakening rand/US dollar exchange rate did little to dampen the positive impact. The average exchange rate between the end of October and Thursday was R10,18/$, aaginst R9,59/$ in the previous comparable period.
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