Fuel price increases to wipe out earlier falls
The positive decline in the fuel price in the first quarter of 2018 may be wiped out as petrol and diesel prices hike this week.
Fuel prices rose sharply in April. The steep hike forecast for May follows further rand weakness against the dollar and higher international oil prices. The Central Energy Fund expected an under-recovery at 47c a litre.
“[This is] pointing to a 47c rise in the petrol price in May 2018,” Momentum economist Sanisha Packirisamy says.
Elize Kruger, NKC African Economics senior economist, forecasts hikes of 50c/litre in the petrol price and 60c/l in diesel. She says as “the positive impact of the fuel prices declines … will be completely wiped out”, the two hikes and the value-added tax (VAT) increase may stoke inflation.
The fuel increase is effective on Wednesday.
The week, however, starts with the Reserve Bank release of private-sector credit extension data for March, which is forecast to drift higher in coming months, Packirisamy says.
Consumers’ appetite for credit will have improved after significant cuts to household debt.
“Banks are likely to start opening up the credit taps in line with a recovery in business sentiments,” Packirisamy says.
Kruger forecasts an acceleration in private credit extension to 5.89% year on year from 5.74% previously, with growth mainly in other loans and advances and new mortgages.
M3, a measure of the money supply that includes institutional money supply, is also published on Monday. Kruger says it is forecast to moderate to 6.2% in March from 6.9% previously.
Also on Monday the South African Revenue Service will publish the monthly trade statistics for March.
On Wednesday the Absa Purchasing Managers Index for April is released. In March the index dropped below the 50 neutral mark, after improvements in the first two months of 2018.
On the same day vehicle sales for April will be published. BMI Research forecast in April that a stronger rand, benign inflation and lower borrowing costs provided tailwinds to boost new car sales in 2018. This would be sufficient to offset higher VAT, carbon tax and calorimeters duty.
Statistics SA will publish data on the use of production capacity by large manufacturing enterprises in February.
Improvement is expected in SA’s manufacturing sector. Packirisamy says demand from the country’s main trading partners has been robust, with expectations of higher export sales volume for the second and third quarters of 2018.
On Friday the Standard Bank-sponsored PMI survey undertaken by Markit will be published. The PMI reviews the entire economy and points to slower activity between February and March 2018.