Sharp drop in the petrol price coming next month

MOTORISTS can expect fuel prices to fall sharply in July thanks to the surprisingly resilient rand and a declining oil price.

Independent economist Dawie Roodt said he expected the petrol price to decline between 60 cents and 64c a litre, with diesel dropping by about 60c a litre.

“The rand has remained largely stable against the US dollar in the first half of June despite all the shenanigans that have been plaguing our political landscape,” he said.

Neil Roets, the chief executive of debt counselling company Debt Rescue, said it could be a very different story in August if credit ratings agencies downgraded the country’s rand-denominated debt to junk status. “This could have a significantly negative impact on the currency, leading to currency outflows, resulting in a higher US dollar crude oil price,” he said.

He cautioned that next month’s drop in the fuel price should not be seen as a windfall.

“We are still technically in a recession, with growth well below 1%. The rand will probably decline further in value against the dollar, which is going to impact on everything from fuel to food.

“Consumers are already up to their necks in debt, carrying a combined debt load of R1.66 trillion. If we see a significant rise in the fuel price in August, this is going to have a substantial impact on the prices of virtually everything,” Roets said.

“It is going to make for a toxic mix that is going to severely impact the more than half of all South Africans who are three months or more behind in their debt repayments.”

Roets said that, since the beginning of January, there had been a marked increase in the number of consumers who have sought relief by going under debt review.

“We have seen an increase of over 20 percent over the past several months in the number of debtors approaching debt counsellors for help.”

He said that for consumers who had not already drawn up a budget, now was the time to do this. “Get rid of credit cards and store cards, which carry very high interest rates, and try to avoid borrowing money, as unsecured loans also carry extortionately high interest rates.”