I regularly check the daily fuel prices which are updated at www.cefgroup.co.za/petrol-price/ and for March there is a substantial decrease to look forward to.  It is amazing how often the petrol price comes down at around the budget speech time, which allows the Government the opportunity to sneak in a few more taxes into a petrol price that is already so over-taxed in South Africa.  As it is, we are currently paying R12,15 for 93 petrol, but the basic price is R4,66 and so everything else is taxes and profits and only some of that money which goes to the Road Accident Fund is actually really benefiting the man in the street.  

At the moment, and the Rand has been showing more strength in recent days, we are looking at a 60c per litre decrease in March.  That can change dramatically of course, but either way, it seems pretty much assured that we are going to get quite a bit of relief in the petrol price which would take it down to around R11,50 a litre for 93, well short of the R14,00 or so that we had some time ago.  

What will worry some people is that one of the reasons that the Rand has been strengthening recently is that the markets are better with inflation having increased a little bit earlier than expected to 6,2% currently, that the Reserve Bank will have no option but to increase the interest rates – so those who are paying off bonds and cars you are probably going to get your next interest rate increase soon – but that should not surprise you because you must have known when you bought anything in the last year or two that we were at the bottom of the interest rate cycle and the only way was up.  Now is a good time to start paying extra amounts into your bond or your car payments so that you can reduce the liabilities that you will face once there have been 3 or 4 interest rate hikes.  One never wants to be in a situation where, like the sellers of the first house I bought in Parkhurst were, when interest rates were so high that they made it difficult for people to make payments and they had to join many people in flooding the market with sales.  I don’t recall exactly what the interest rates were in 1998, but they were close to 24%, and so one must not be surprised if one gets continued increases over the next few years.  Worldwide we are in a low interest rate environment but South Africa’s situation is somewhat different.  The lowest interest rate we ever had in South Africa was in July 2012 at 5%, so people who bought things at that time were really buying at the lowest rates ever and over the last 18 years interest rates in South Africa had averaged approximately 12,9.  That means take advantage of the petrol price reduction and use that extra money to pay into your debts – whether it is payments on your car or payments on your house so that you don’t feel completely naked if interest rates continue to hike over the next 2 or 3 years.