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Fuel and interest rate cuts may boost household budgets

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A decrease in fuel price and interest rates may provide a boost to SA households which are under financial strain, says FNB. Earlier this year, the Bank revealed that middle-income consumers spend a quarter of their earnings to pay off interest on debt.

The possibility of a decrease in fuel price was indicated in a recent forecast by the Automobile Association (AA). The AA indicated that, in July, the price of fuel may drop by 91 cents per litre of petrol while diesel and illuminating paraffin is estimated to decrease by 70 cents and 62 cents respectively. The estimated reduction is yet to be confirmed by the Department of Energy.

“Transport accounts for a large portion of consumers’ spend whether one uses public transport or a private car. Following a spate of steep fuel increases in the first half of this year, many consumers will be looking forward to some financial relief to finish the year in a better position,” says Dr Christoph Nieuwoudt, CEO of FNB Consumer.

The predicted fuel price decrease may not be the only good news for consumers. In July, the South African Reserve Bank’s (SARB) Monetary Policy Committee (MPC) is expected to announce its decision on interest rates, and economists are optimistic about the possibility of a rate cut.

“Interest rates have been stable for some time, giving consumers a level of certainty in terms of servicing debt and accumulating savings. A rate cut in the short-term will be a good incentive for consumers to rework their budgets, reduce reliance on debt by paying more or boosting their capacity to save,” he says.

“From an FNB perspective, our customers can look forward to several reductions in bank fees on our entry level bank accounts. The changes we are introducing will provide significant value across our Retail continuum. In addition to eBucks, we’ll also be rewarding qualifying customers with free data, voice minutes and SMSes via FNB Connect,” concluded Nieuwoudt.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.