What lower oil price may mean for you

The drop in the oil price is likely to result in lower inflation for you, the consumer.

Futuregrowth says it expects inflation to fall sharply from its recent peak of 6.6 percent.

Futuregrowth portfolio manager Wikus Furstenberg says the sharp drop in the price of oil has resulted in Futuregrowth adjusting its 2015 average inflation forecast from 5.6 percent to 4.6 percent. There is some risk that, because of rand weakness, inflation may be higher than this estimate, but low energy prices and weak consumer demand should limit any increase, he says.

Cannon Asset Management chief investment officer Adrian Saville says Cannon expects consumer price inflation to moderate to about 4.5 percent in mid-2015, which will ease the pressure on the Reserve Bank to raise the prime rate to quell inflation.

Imara Asset Management managing director Lara Warburton says the prices of most consumer goods do not fall when the oil price and transport costs decrease, but there is likely to be a longer delay before prices increase.

Stable expenses and rising incomes mean that many people can spend more, which is positive for the economy, and this should result in interest rates remaining low for longer, which is good for the consumer.

She suggests that, when you review your financial plan, it would be prudent to assume stable interest rates (9.2 percent for the prime rate) and stable inflation (5.8 percent for the Consumer Price Index) for 2015. If the inflation rate turns out to be lower, your assumptions will have been conservative.