Latest news with #R18.04
The Citizen
3 days ago
- Business
- The Citizen
Weekly economic wrap: Rand strongest since December, but falling again
Although the rand kept its head up all week and strengthened even more on the back of the repo rate cut, it lost traction on Friday afternoon. The biggest economic news of the week was the mostly unexpected cut in the repo rate of 25 basis points, while the rand kept its momentum and reached its strongest level since December. Gold, on the other hand, was not so lucky. Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research, says the Monetary Policy Committee (MPC) of the South African Reserve Bank (Sarb) decided to cut the repo rate by 25 basis points to 7.25%, which means that the prime interest rate is now 10.75%. 'The dovish tilt, with all six members voting for a cut and one member even preferring a 50 basis points cut, was surprising, but welcome. In addition, the clear signalling around moving to a 3% inflation target is positive and removes uncertainty.' Bianca Botes, director at Citadel Global, points out that the rand strengthened to its best level since December, helped by a weaker dollar and the Sarb's repo rate cut, which aims to support the local economy and as inflation remains low. Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit, also point out that the rand gained further ground this week. 'The Sarb's interest rate cut and the announcement of the imminent lowering of the inflation target boosted sentiment, lifting the local unit to R17.80/$ late Thursday, and on Friday morning it was trading around R17.83/$.' Unfortunately, the good news did not last, and the rand traded at R18.04 on Friday afternoon. ALSO READ: Reserve Bank cuts repo rate thanks to lower inflation, stronger rand Decrease in prices of oil and gold Oil prices dropped for the second week in a row, with Brent Crude trading near $63/barrel, Botes says. 'This decline is driven by investors remaining uncertain about what will happen with US tariffs, as the legal back-and-forth is making the market more unpredictable. 'Traders are also watching the upcoming expanded Organization of the Petroleum Exporting Countries (OPEC+) meeting, where major oil-producing countries are expected to agree on increasing oil production in July.' Botes says there is extra tension because Kazakhstan is producing more oil than it is supposed to, which could lead to even more supply than planned. On the demand side, recent US economic data shows the economy shrank slightly in the first quarter, raising worries that people and businesses might use less fuel.' She says gold prices also slipped to around $3,290/ounce and are heading for a weekly loss, as investors wait for the PCE index, which could affect future interest rate decisions. Investors also remain cautious as they wait for more clarity on US inflation and interest rates. ALSO READ: Producer Price Index remains unchanged, but an increase is coming Producer price inflation remains muted Lebohang Namo, economist at the BER, says producer price inflation (PPI) for final manufactured goods, remained unchanged at 0.5% in April. 'Like consumer inflation last week, this was above consensus expectations following a string of downward surprises.' Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, say continued deflation in fuel, paper products and transport equipment helped keep overall producer inflation contained in April. Nkonki and Matshego, economists at the Nedbank Group Economic Unit, say April's producer price inflation provided more evidence of subdued price pressures. Producer inflation held steady at 0.5%, matching our forecast and exceeding market expectations of 0%. 'Deepening fuel price deflation offset higher food prices. Elsewhere, price pressures remained relatively subdued. Food, beverages and tobacco inflation accelerated from 4.1% to 4.7%, while deflation in coke, petroleum, chemicals, rubber, and plastics deepened from 4.1% to 5.5%. Producer inflation will likely rise moderately off a low base in the months ahead.' ALSO READ: Salaries decreased by 2% in April, but higher than a year ago Private sector credit extension increased in April Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano say Private Sector Credit Extension (PSCE) growth increased to 4.6% in April, up from 3.4% in March, largely driven by an acceleration in corporate credit growth, which increased to 6.0% from 3.9%. Household credit growth was 3.0%, marginally higher than the 2.9% recorded in March. Within corporate credit, growth in general loans and advances rose to 7.4% from 4.3%, overdraft growth climbed to 12.6% from 10.3%, and mortgage advances grew by 6.2%, slightly up from 6.1% in the previous month. Instalment sales credit growth remained stable and above inflation at 5.0%, compared to 5.1% in prior months, while credit card growth declined sharply to 0.6% from 2.5%. In the household segment, general loans and advances and overdrafts remained in contractionary territory, while mortgage advance growth was stable at 2.3%, unchanged from the prior month. Growth in other household credit categories remained above inflation, with instalment sales credit at 6.2% and credit cards at 8.5%. Nkonki and Matshego say the growth in broad money supply improved slightly from 5.8% in March to 6.1% in April, exceeding their expectations of 5.9%. 'The boost in PSCE came from faster growth in loans and advances and a less severe decline in bills and investments. 'The most significant momentum came from companies, where advances jumped from 5.5% to 7.5%, amplified by last year's low base. Even so, company overdrafts and general loans accelerated, while commercial mortgages and instalment sales and leasing finances held relatively steady.' They also note that the slow recovery in household loans continued, rising slightly from 2.9% to 3%. 'The uptick came mainly from a rebound in credit card usage, while vehicle finance and home loans were unchanged. We expect the recovery in credit demand to gain moderate upward traction in the months ahead, supported by easier financial conditions and firmer domestic demand.'
The Citizen
15-05-2025
- Business
- The Citizen
Petrol price relief still on the cards for June: Here's what you could be paying
Mid-month fuel price data points to a slight dip for both petrol and diesel at the pumps in June. Get the latest figures here. Current data indicates that conditions are positive for a drop in petrol and diesel prices in June 2025. Picture: iStock South African motorists have been getting more revs for their money since March this year, with the May drop in petrol and diesel prices being the third consecutive fuel price cut for 2025. Should current market conditions persist until the end of May, even more petrol and diesel price gains could be on the cards come June. The latest unaudited data from the Central Energy Fund (CEF) points to a modest over-recovery of about 30 cents per litre in petrol prices and around double that for diesel. The state of fuel prices at the pumps South Africans currently pay R21.29 for a litre of 93 unleaded petrol ( ULP) in Gauteng, with 95 ULP retailing at R21.40 inland and R20.60 at the coast. This follows price cuts of 22 cents per litre for 95 ULP and 21 cents for 93 UPL at the beginning of May, while diesel decreased by between 41 cents (50ppm) and 42 cents (500ppm). June fuel price: Expected changes in petrol, diesel and paraffin The CEF, a state-owned energy company reporting directly to the Department of Petroleum and Mineral Resources, looks at pertinent data such as the exchange rate and global oil prices for its snapshots. These are the June fuel price projections at mid-month: Petrol 93: Decrease of 30 cents per litre. Decrease of 30 cents per litre. Petrol 95: Decrease of 30 cents per litre. Decrease of 30 cents per litre. Diesel 500ppm (wholesale): Decrease of 60 cents per litre. Decrease of 60 cents per litre. Diesel 50ppm (wholesale): Decrease of 61 cents per litre. Decrease of 61 cents per litre. Illuminating paraffin: Decrease of 63 cents per litre. Main fuel price drivers: Rand/dollar, global oil prices The most important factors influencing the price of fuel locally are the average rand/dollar exchange rate throughout any given month, as well as the average price of oil in that same period. Global oil prices have stabilised following a surge last week to around $66 per barrel on the back of tariff tensions between China and the US easing. Despite a stronger rand coming to the rescue, if oil prices remain at current levels, the fuel price over-recoveries could shrink by month-end to around 15 cents for petrol and 40 cents for diesel. At the time of writing on 15 May, the rand was trading at R18.04 against the American greenback. The price of Brent Crude Oil stood at $64.44 per barrel. ALSO READ: Small fuel price decrease no help for consumers in looming rough ride Official fuel price: Who has the final say As always, the latest data update comes with the caveat that it is still early in the month, and market conditions can swing before the Department of Petroleum and Mineral Resources makes the final announcement at the end of this month. According to the department, the unaudited CEF snapshots are not predictive and do not cover other potential changes, such as slate levy adjustments or retail margin changes, which could still have a bearing on the final fuel prices. The official fuel price adjustments will come into effect on Wednesday, 4 June. READ NEXT: Fuel price explainer: How is the petrol price determined? [VIDEO]
