Respite for consumers as fuel prices drop
Isaac Pinielo | Tuesday September 8, 2015 15:48
Economic analyst at Motswedi Securities, Garry Juma said the fuel price reduction is an early Christmas for all the consumers.
“It will certainly relieve some pressure, especially from those businesses that have high fuel bills, such as in the transport sector etc,” he said.
With regards to inflation, Juma said the fuel reduction will lower the ‘transport’ inflation category, which has a weight of 19 percent towards the Consumer Price Index (CPI) basket and is the second largest after the ‘food and non-alcoholic beverages’ group. “As a result, we expect the September inflation numbers to come off, reflecting the cut in fuel prices,” said the analyst. A statement from the Ministry of Minerals, Energy and Water Resources last week stated that as of September 6, retail pump prices of all petrol grades decreased by 15 thebe per litre, while prices of all diesel grades went down by 40 thebe per litre. Retail pump prices for illuminating paraffin decreased by 40 thebe per litre. In addition, retail and wholesale margins have been increased by 2.6 and 2.2 thebe per litre respectively.
The ministry stated that price adjustments are caused by a decrease in crude oil prices internationally.
Crude oil prices have been declining since June this year and the current decrease has been attributed to concerns of over-supply resulting from an increase in the US stockpiles as well as the slowdown of the Chinese economy. International crude oil prices averaged $46.58 in August.
The last fuel price adjustment was effected on February 14 this year when unleaded petrol 93 was reduced by 104 thebe per litre, unleaded petrol 95 was reduced by 103 thebe per litre, diesel 500ppm was reduced by 103 thebe per litre, diesel 50ppm was reduced by 107 thebe per litre while the retail price for illuminating paraffin was reduced by 65 thebe per litre.