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The SA Daily 14 November 2018

Oil's slide offers the most relief to the lower-middle consumer

  • Per The SA Daily of 08 November, oil prices receding is due to supply and demand rebalancing; softer oil, and a firmer rand, should therefore mean petrol price relief for consumers.
  • Today, we look at how high oil has affected consumers this year. Data from the Bureau of market Research (BMR) shows that transport as a percentage of expenditure for lower-middle income groups has been rising. For lower income groups, taxi fares, their main component of transport costs, rose 9.84% y/y-10.97% y/y between 2016/17-2017/18, driven mainly by higher fuel prices. For the middle income groups, transport costs rose 6.4% y/y-6.2% y/y between  2016/17-2017/18 due to elevated oil prices as well as maintenance and repairs, the latter being due to the average age of a vehicle on SA roads rising and replacement cycles getting longer due to the tough economic climate.
  • We conclude that lower-middle income consumers will find the most relief from lower oil prices.

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