The significant decrease in fuel prices for October will provide real relief for financially constrained South African consumers,
This comes as the Minister of Mineral and Petroleum Resources, Gwede Mantashe, announced yesterday the adjustment of fuel prices based on current local and international factors, such as lower global oil prices and the stronger rand exchange rate, with effect from Wednesday.
The department said petrol 93 (ULP & LRP) would decrease by R1.06 and petrol 95 (ULP & LRP) by R1.14 per litre.
Henry van der Merwe, chairperson of the South African Petroleum Retailers Association (Sapra) – a member of the Retail Motor Industry Organisation (RMI) – said yesterday that the fuel price cut was a highly positive development for the economy, especially in these challenging times as we approach the last quarter of the year.
Van der Merwe said lower fuel prices put more disposable income in the pockets of consumers, and would also help ease some inflationary pressures.
“The relief at the pumps will provide much-needed breathing room for both businesses and individual consumers, particularly following the recent interest rate decreases,” he said.
“This could stimulate broader economic activity as consumers may allocate more funds to goods, services, and leisure, thereby boosting retail sectors.
“Fuel is a key input in the production and transportation of goods. The decreased fuel prices can help lower production costs, resulting in a reduction in the prices of goods and services which will help curb inflationary pressures, creating a more stable economic environment.”
Van der Merwe said the continued decreases were also helping to boost business confidence, particularly for those businesses reliant on fuel-intensive operations, such as logistics, transport, and manufacturing.
He said the latest relief measures should be viewed as part of a larger national and global economic trend.
“The ongoing reduction in fuel costs should impact operational expenses and could stimulate investment in other areas of the business, fostering growth and employment opportunities. Consumers will be the big winners with petrol and diesel prices dropping by over 100 cents per litre. We should also start to see these reductions translating into lower transport fares, benefiting those using taxis, buses, or other forms of public transport.”
Benay Sager, chairperson of the National Debt Counsellors’ Association (NDCA), said they were expecting the fuel price to be about 20% lower than what it was six or seven months ago, compared to the highs of early March.
“I think if you factor in the interest rate cuts that happened two weeks ago, it will help the consumer significantly,” Sager said.
“For example, if consumers were spending R1 000 on fuel, they are now probably going to end up spending more like R900. And compared to March, if they were spending R1 000 back in March, they’re now going to be spending around R750 for the equivalent (amount of fuel). That’s very significant in terms of putting back into the pockets of consumers.”
The NDCA said more significantly, interest rates cuts will have some impact.
“They will be quite minor, in our view, but there is also the access to the retirement annuity funds, to some extent; and I think all of these things combined are going to put the consumer in a better mood and probably encourage consumers to spend a little bit more.”
James Williams, head of marketing at microlender Wonga, said the combination of lower fuel prices, interest rate cuts, and a stronger rand was likely to provide a significant respite to South African consumers.
“This could lead to higher levels of consumer confidence, and a more positive outlook for the festive season,” Williams said.
“However, it’s important to note that the impact of these factors may vary depending on individual circumstances. Some consumers may benefit more than others, and there may be other factors that could influence spending patterns – such as pending medical aid review rates, as well as potential electricity tariff increases.”
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