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Cape Town - Petrol is at its cheapest level for the year after the latest drop reversed all gains for 2014 and an economist is seeing a further decline in the new year.
The Department of Energy on Friday announced that the retail prices of both grades of petrol will decrease by 69 cents a litre (c/l) on Wednesday December 3. The price of wholesale diesel will decrease by 53c/l.
At the reef, since January, 93 octane (ULP and LRP) increased by R1.50c/l, but the overall decline amounted to R2.18 c/l. The overall decline of R2.23c/l for 95 octane completely wiped out the total increase of R1.51c/l for the year.
At the coast, since January, 93 octane ULP increased by R1.46c/l and dropped by R2.18c/l, while 95 octane (ULP and LRP) increased by R1.52c/l and fell by R2.18c/l.
Christmas gift
Economist Mike Schüssler, director at economists.co.za, "greatly welcomed" the December petrol price decrease.
"This is a great gift as the total saving since the highpoint in May 2014 would be just over R2," Schüssler told Fin24.
"This puts close to R300 a month back in the pocket of the motorist who can now shop a little more."
Schüssler said according to the BankservAfrica index, the disposable salaries of formal sector workers average just over R12 500.
"The typical take home pay is just under R10 000 per month. So the R300 saving per month is just over 3% of people's take home pay."
He said consumers will likely be spending this money on themselves and probably on retail goods or perhaps even entertainment.
"This is a great Christmas gift for consumers," he said.
Licence to spend?
However, Debt Rescue CEO Neil Roets told Fin24 that the petrol price drop will bring only temporary relief to consumers who jointly owe close to R1.5 trillion to credit providers.
"Although the price reduction is good news, consumers should rather look at reducing their debt load instead of going on a spending spree this holiday season," he cautioned.
"With Christmas around the corner, some consumers may see the extra cash in their pockets as an early Christmas present. This is not the case because there is a strong likelihood that the rand could fall suddenly because the economy remains weak."
Roets said because most goods in the country are delivered by road transportation, the price decrease should ideally result in slightly lower food prices. "Unfortunately this does not always happen."
Breather for the new year?
With world oil prices in a downward spiral after Opec decided to hold output at current levels, Schüssler said he expected a further petrol price dip in the new year.
"In January consumers could get another decrease of about 45 cents a litre.
"This would mean that the total decline would be close to R2.50 from the highpoint or about 17.4%, one of the biggest declines ever in percentage terms, but the biggest nominal rand decline ever."
VIEW: Petrol price movements for the year to December 2014:
Source: Automobile Association
