The contribution to general inflation will also fall,
writes Alan Peat
THE IMPACT of the latest fuel price increases is not as great as at first appears, according to specialist fuel economist Tony Twine of Econometrix.
Commenting on the increases of 19 cents for petrol and 6c for diesel, Twine said: ÒThey are certainly of concern - but we mustn’t get carried away.
ÒWhile petrol is now at its highest ever price in SA (2c higher than its top price in the last quarter of last year), the interesting thing about this April’s increase is that it is less than the 25c increase of last April.Ó
Effectively, Twine added, this actually means that petrol price inflation has actually decreased on a year-on-year basis - with last April’s 28% reduced to 17% this April.
ÒThe thing to remember,Ó he said, Òis that the contribution to general inflation will also fall because of this decline.
“The inflation outlook for petrol as a driver of price increases is, therefore, slowing down.Ó
On diesel, Twine points to the fact that supply is now benefiting from the annual end of the northern hemisphere winter. “That,Ó he said, “is a normal downward pressure on diesel prices.
“And the end result of this is that - while diesel prices were rising more quickly than petrol in August/September last year - they are now rising more moderately. Indeed, earlier this year, the diesel price actually fell more than that of petrol.Ó
There’s nothing untoward about these latest price increases either, according to Twine.
“The increases resulted from three factors,Ó he told FTW. “First the worsening rand/US dollar exchange rate. Second the price of petrol firming in our two benchmark refinery areas (Singapore and Bahrain). And third, the increases in fuel tax and the 3rd party levy.Ó
