Falling fuel prices are good news for motorists and monetary policy
Economist Kevin Lings says the fuel price cuts will have a ‘massive’ effect on CPI inflation, and boost the chances of a rate cut
A drop in fuel prices on Wednesday should help bring inflation under 5% within two months, boosting the chances of an interest rate cut in 2017, Stanlib chief economist Kevin Lings says.On Friday, the Department of Energy’s Central Energy Fund announced the Gauteng price of 93 octane petrol will drop by 69c to R12.63 a litre, and 95 octane petrol will drop by 68c to R12.86 a litre.Petrol price competition is prohibited in SA, with all garages required to charge the same amount depending on whether they are classified as "inland" or "coastal". Some competition is permitted for diesel, where the government sets the wholesale price and garages are allowed to set their own profit margin.The wholesale price of diesel will fall 60c a litre on Wednesday.Lings said in a note e-mailed on Sunday that July’s drop would take the price of 95 octane petrol down 10.6% from the record high of R14.39 a litre reached in April 2014, and 48c a litre below the price a year ago. "The petrol price decline...
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