Consumers in South Africa are expected to continue feeling the price pressure and high borrowing costs in spite of the significant petrol price cuts in June and July, following four consecutive hikes this year.
This comes as motorists are to pay R23.26 per litre to fill up with 95 unleaded petrol and R22.86 for unleaded 93 99 cents less; just over R1 less than in June respectively, after the new petrol price cut came into effect yesterday.
Koketso Mano FNB senior economist said a combination of lower oil prices, lower refinery margins, as well as a less depreciated rand had supported these fuel price cuts.
When we think about the oil market, you know the fact that the market is finally balanced means that prices will be sensitive to sentiment and economic data. So despite some interest rate cuts that we have seen being delivered by several central banks around the world, monetary policy is expected to remain largely restrictive at least until inflation falls convincingly towards targets, Mano said.
So this should contain demand weighing on oil prices. But that said, higher demand in the Northern hemisphere over the summer should temporarily support prices. In addition, continued geopolitical tensions as well as climate risks should uphold some risk premium on commodity prices.
