In past five years it's stayed below CPI inflation barometer
WITH THE sound of complaints about the petrol price reaching a high decibel count last week - as petrol boomed up by 18 cents a litre - the usual moans are being heard.
The government's just ripping us off!
An extra R18 a tank. I can't afford it anymore.
I remember when a R50/R20/R10/R5/R2/R1 note (depending on the talker's age) used to fill my tank - and still leave me enough for a rump steak supper.
This just pushes the inflation rate through the roof.
It goes up just about every month now.
And so-on, and so-on.
The last two might bear some element of truth for petrol - and especially these last couple of months (motorists already forked out an extra 7c a litre during April, before this latest rise).
But for diesel - as the transport mode's main fuel, probably the more important driver of the inflation rate - similar gripes might be a bit out of place.
Although not strictly accurate as an evaluation method, play the increases in the diesel price compared to the general inflation rate game.
Diesel (whose wholesale price has just gone up by 8c/l) has risen in price by a total of 35.9% in the last five years - a compound increase which falls below the level of the CPI (consumer price index) inflation barometer in the same period. Of course - looked at as a contributor to inflation - the figures take on a more sinister meaning.
However, apart from a big 18.7% upward bound in June, 1996, the increases have been: June 94-June 95, +3.8%; June 96-June 97, +2.6%; 97-98, MINUS 1.9%. And the latest (although, +9.4%) is largely justified by the upward leap in the international price of oil, from US$10 a barrel a year ago to around US$16-p-b now - a 60% jump.
The wholesale price in Gauteng (coastal prices are about 10c/l cheaper because no transport charges - an arguable cost - are incurred) has gone: June 94 - 153.90c/l; June 95 - 159.90c/l; June 96 - 189.90; June 97 - 194.80c/l; June 98 - 191.10c/l; May 99 - 209.10c/l.
However, the damage to the economy caused by the fuel price increase in general, might very well be lessened by another factor.
Stemming from the fact that the fundamentals for the economy don't look too bad for next year, Pieter Calitz, senior economist at Gensec Asset Management, feels that further decreases in the interest rate are looming.
He pointed out that the latest 1% drop in April (reducing the CPI by 0.6% in his calculations) is more-or-less wiped-out by the 0.3%-0.4% that the fuel price increase directly added - with the exacerbating factor of a longer-term, indirect effect, which would add about 0.8% to the CPI, according to Calitz.
But he also supposes that there will probably be about three more drops in the interest rate in forthcoming months.
As Calitz reckons that every 1% drop in interest rates trims 0.6% off the CPI - this latest fuel price increase might not have such a shattering effect on inflation as most people seem to believe.
By Alan Peat
