ECONOMIC WEEK AHEAD: Rise in fuel price and trade surplus expected
The Central Energy Fund will announce the fuel price adjustment for September on Friday
A fuel price hike is on the cards for September amid expectations of a higher trade surplus and credit extension growth in a raft of data to be published this week.
The Central Energy Fund will announce the fuel price adjustment for September on Friday after Statistics SA publishes data on liquidations and insolvencies on Monday.
The new fuel price takes effect on September 5. Economists are expecting a rise in petrol and diesel prices due to the weaker rand. FNB chief economist Mamello Matikinca said fuel prices are likely to rise about 18c a litre.
The producer price index (PPI), which will be published on Thursday, is forecast to ease to 5.8% year on year in July from June’s 5.9%. This is underpinned by rises in the cost of transport equipment and administrative price inflation due to raised oil prices in rand terms, a weaker rand and increases in utility prices at municipalities.
BNP Paribas economist Jeffrey Schultz expected month-on-month PPI to slow to 0.4% in July from 0.9% in June.
Also on Thursday the Reserve Bank will release data on private sector credit extension, which is forecast to rise to 6.14% year on year in July from 5.68% in June.
FNB did not expect a meaningful acceleration in credit growth, "given low levels of domestic consumption and investment", Matikinca said.
The Treasury will print the budget figures for July on Thursday. This data will be closely watched, Matikinca said, to see if for the year to date the budget deficit can shrink from its current R27.6bn and whether the double-digit increases in VAT revenue can be sustained amid weak domestic consumption.
The week will end with trade statistics for July and the Absa purchasing managers’ index for August on Friday.
The PMI is expected to retreat to below the 50 neutral mark due to a weak domestic environment.
The weak economic conditions are forecast to contain import growth and possibly have resulted in a trade surplus for July.
A weaker currency and still supportive terms of trade are other factors.
BNP Paribas forecast a surplus of R5bn compared to FNB’s prediction of R2.7bn. In June the surplus was R12bn.
Correction: August 29 2018
An earlier version of this story said the fuel price adjustment for September was due on Wednesday. It is in fact due on Friday August 31. The new prices come into effect on Wednesday September 5.