July will start on a good note for motorists with the announcement on Friday that the price of petrol was set to drop 18c and that of diesel by at least 11c.
In its monthly price adjustment statement, the Department of Minerals and Energy said the change would come into effect just after midnight on Wednesday morning.
The department said the retail price of all grades of petrol would drop by 18c.
The wholesale price of diesel with a sulphur content of 0,3% is set to drop 11c per litre and that with 0,05% 12c.
The wholesale cost of illuminating paraffin will also drop 11c a litre.
Explaining the reasons for the price drop, the department said the average international prices of petrol, diesel and illuminating paraffin decreased during June, while the rand strengthened against the dollar.
Tradek economist, Mike Schussler, welcomed the announcement, saying it should keep inflation 0,02% less than it would otherwise have been.
Fuel price rises earlier this year, caused by a falling rand and a climbing oil price, were a major factor in the steep climb of inflation and the consequent increase in interest rates.
”The price drop will also ease pressure on the Reserve Bank,” Schussler said.
Reserve Bank governor, Tito Mboweni, has increased interest rates three times this year to enforce the Bank’s inflation target of 3% to 6%.
The CPIX — the instrument the SARB uses to target inflation — stood at 9,2% in May.
The price drop should also give hard-pressed consumers a break.
Retailers have been blaming fuel for pushing up food prices by increasing production outlay on farms and transport expenses to the market.
Schussler added that the fuel price from July would be about the same as the year before. – Sapa