Slight petrol price decrease for SA

Cape Town - The retail petrol price will dip by 10c a litre next Wednesday due to lower international prices, the energy department said on Friday.

The price of 95 grade petrol in Gauteng will drop slightly to R12.10/l, while at the coast it will cost R11.75/l. However, the wholesale diesel price will go up to R11.44.

The price of 0.05% sulphur diesel will be 10.2c/l higher, while that of 0.005% sulphur diesel will rise by 9.2c/l.

The petrol price breather follows last month's 23c/l increase and this year's highest single price hike of 93c/l in August.

Meanwhile, despite high petrol prices the National Association of Automobile Manufacturers (Naamsa) on Friday said that total new vehicle sales rose by 10.5% year-on-year (y/y) in October to 57 845 units.

Naamsa said the increase was partly boosted by record low interest rates.

Exports of locally produced vehicles however fell by 3.3% y/y in October, as the transport strike caused disruption at various manufacturing plants and affected output and exports during the month.

While relatively lower lending rates were boosting domestic sales, rising inflationary pressures and a weaker rand could push vehicle prices unsustainably higher, weighing on demand for the remainder of the year and in 2013, reports Reuters.

Meanwhile, the single maximum national retail price for illuminating paraffin will increase by 4c to R8.70/l.
The maximum retail price for liquid petroleum gas will increase by 1c per kilogram.

Source : fin24.com
Tags : petrol south africa, petrol price, petrol price decrease, petrol gauteng, department of energy
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Possible interest rate cut forecast for SA

Interest rate cut

Johannesburg – Bank of America Merrill Lynch is forecasting another 50 basis-point (bp) rate cut for South Africa in November and believes the country’s first rate hike since 2008 is only likely to occur in the first quarter of 2014.

The bank also forecasts that inflation is likely to remain within the South African Reserve Bank's (SARB) 3%-6% target range over the coming year.

“In the very near term‚ we expect a little more inflation pressure in Q3 2012 than we had previously but this is still likely to dissipate in Q4. In H1 2013‚ we also expect stronger inflation relative to our previous forecasts but expect this to ease nicely late into the year‚” the bank said in a report.

“All things considered‚ we expect headline consumer price index to back up to 5.4% by September on higher petrol prices.

Thereafter‚ despite food price inflation picking up from 5.4% in July to 9.7% in December‚ weaker goods (ex energy) inflation into year-end from a sharp slowdown in economic growth to below 2% annualized in both Q3 and Q4‚ will likely combine to take headline inflation back down to 5.2% by year-end. 

"If is also worth noting that the rally in US dollar/rand over the past week to the 8.20 level may also lead to some petrol price relief from October‚ assuming the Rand holds these levels in coming days and weeks.

“From the perspective of the SARB‚ the combination of the weaker activity data we expect in coming months together with a probable moderation in inflation from October will likely provide the backdrop for a 50bp cut in November‚ in our view‚” the bank added.
It believes the late 2012 trend toward lower inflation will reverse into 2013‚ adding that it has revised its inflation forecasts higher for H1 2013.

“In the main this represents ongoing pass-through into food price inflation which will likely accelerate to 14% year-on-year in H1 2013‚ on average‚ as categories such as meat and diary respond to higher maize prices with a lag of about 9 months in our inflation model. 

"While this upward effect is tempered by a further moderation in goods (ex energy) inflation‚ headline nevertheless moves higher to 5.6% by mid-year‚ with a chance of a temporary peak around the 6% mark moving into Q3.

"Evidence of higher inflation will likely put a break on any further easing by the SARB‚ in our view‚ and is the principal reason we forecast only one further rate cut to come (to 4.5%) in November this year‚” the bank stated.

Pressure from food prices is likely to dissipate in H2 2013‚ in the bank’s view‚ allowing for headline inflation to moderate‚ assuming our assumptions that oil prices fall back below $100 and dollar/rand tracks around an 8.00 level prove correct.

“We see headline inflation moderating back to 5.2% by end-2013‚ which will likely occur against the backdrop of improving economic growth. Taken together‚ we believe this will allow the SARB to remain on the sidelines. We therefore expect the repo rate will be left at the level of 4.5% into early 2014.”

The bank said its new inflation forecasts support the notion that the SARB will operate in three distinct Acts. Into late 2012‚ inflation already below 6% will likely moderate back toward 5% amid weakening activity data. 

This combination will reinforce the SARB’s dovish‚ growth-orientated outlook and is likely to lead to a 50bp cut in November. 

Act Two‚ of rising inflation in H1 2013‚ will probably see the SARB on the sidelines‚ notwithstanding potentially soft economic growth. 

In Act Three‚ even through economic growth is likely to pick up in H2 2013‚ moderating inflation implies no need for the SARB to rush to hike rates.

“We therefore see rates on hold at 4.5% throughout 2013 and see the earliest possible hike in Q1 2014.”


Source : Fin24.com
Tags : rate, rate cut, interest rate cut, interest rate south africa, reserve bank, repo rate, repo rate news 

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E-toll taffifs latest reductions

Pretoria - The e-toll tariff for light vehicles with e-tags has been reduced to 30c/km, Sanral said on Friday.

This was down from the 40c/km decided on last year, Sanral toll and traffic manager Alex van Niekerk told reporters in Pretoria.

The base tariff for light vehicles would remain at 58c/km.

Van Niekerk was giving a SA National Roads Agency Limited presentation on the Gauteng highway e-toll system.

Part of the presentation was the tariff history.

He said the e-tag tariff for motorcycles had been dropped from 24c/km to 18c/km, for medium heavy vehicles (Class B) from R1/km to 75c/km, and heavy vehicles (Class C) from R2/km to R1.50/km.

Transport Minister Ben Martins said government had proposed that toll fees for e-tag users be capped at R550 a month for light vehicles.

Van Niekerk said only about 0.2 percent of Gauteng road users would pay the e-toll cap.

About 78.5 percent of motorists using the freeway were expected to pay less than R100 a month, using e-tags, he said.

About 91.3 percent would pay less than R200 and 96.3 percent would pay less than R300. - Sapa

Source: iol.co.za
Tags: e tags,sanral, etoll, toll tariffs, toll tariffs reduces
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Saving money the compound interest advantage

Cape Town - You've probably heard the term before: compound interest. But do you really understand how this works?

Compound interest is what allows a very average saver to become a wealthy individual. What's the secret? The value of compound interest is not in saving vast amounts – instead, it's all about when you start saving.
According to Danelle van Heerde, head: advice processes and tools at Sanlam Personal Finance, it is important to understand the basic principle of compound interest.

Piggy Bank

"It's effectively earning interest on interest on interest. So, once you have put your savings aside, however insignificant it may seem, you do not have to do anything, bar watch your money increase.
"It's the best way for your money to grow over the long term."

Van Heerde shows the strength of compound interest by taking a saving of just R250 per month. "For many savers, R250 amounts to a single trip to your local store to stock up on groceries."

Put another way; imagine taking just R8 out of your purse daily, and setting it aside.
How does compound interest work?

If you save R250 a month between the ages of 24 and 30, you will, according to Van Heerde's calculation, have accumulated more at age 65 than someone who saves the same amount monthly from age 35 to 65.

In the first example, you have actively put away R250 for six years, or 72 months, amounting to R18 000 without interest. In the second, you've actively saved R250 for 30 years, or 360 months, worth R90 000.
And somehow you will still have more at age 65.

It works like this:

- If you put R250 away monthly between 24 and 30, and then leave those savings in your account, you'll be worth R479 453 by age 65.

This is based on an interest rate of 9% (Van Heerde says this is calculated assuming 6% inflationary returns, plus 5% real returns, with 2% subtracted for fees).

- On the flip side, put away R250 between 35 and 65, and you'll only end up with R425 528. "The difference is in the extra amount of time that your savings have to earn interest or compound, starting at age 24 instead of 35," she says.

How can it benefit you if you'd like to save for your children's education?

This lesson is an important one for parents in particular. School and university fees are becoming increasingly burdensome on parents – but making use of compound interest is a great way to reduce this load.

Source fin 24
Tags : saving money, compound interest, sa saving money, finacial freedom

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Risks of unsecured loans

Unsecured lending and bank charges were discussed at a meeting between Finance Minister Pravin Gordhan and the country's bank chiefs yesterday. But these controversial issues were played down in a statement from the ministry that started on an upbeat note.

"The theme of the meeting was the role of banks in South African society, highlighting the positive role banks could play in meeting the country's socio-economic challenges and contributing to the achievement of the vision as outlined in the National Development Plan."

However, the statement went on to express concern about "the rapid increase in unsecured lending" and called for banks to lend responsibly. "The meeting agreed that the poorer households were at risk of getting caught in a debt spiral."

The statement conceded that some of the personal lending was by non-bank financial institutions, including retailers. But it said banks could do more to ensure that they did not contribute to the overindebtedness of households.

A report earlier this year from PwC noted that earnings growth had been under pressure at banks. To meet upcoming liquidity requirements under Basel 3, banks need to increase the maturity structure of their deposits. The longer the term of a deposit, the higher the interest rate banks must pay, squeezing margins.
PwC said to compensate, the banks had boosted interest income by providing riskier loans, increasing the relative share of unsecured lending.

The issue became a political football. In April, SACP general secretary Blade Nzimande made a bitter attack on the banks. He said there had been "a huge increase in the number of unsecured credit transactions, a phenomenon similar to that which led to the housing bubble bursting in the US, triggering the current global capitalist crisis".

But the issue was played down by the Reserve Bank. Deputy governor Lesetja Kganyago said that while growth in unsecured lending had accelerated, it represented only R50 billion of the banks' R2 trillion worth of assets.

The central bank did not let the matter lie, but asked the banks for better reporting of their unsecured loans. And, in its latest banking supervision report, it warned that banks with "significant unsecured lending portfolios" could be obliged to have higher capital adequacy ratios.
The extent of the increase in this type of lending was highlighted earlier this month when Standard Bank reported that unsecured lending to customers who earn less than R8 000 a month grew to R3.4bn in June, from R761 million in June last year.

And the group said its unsecured lending book, including credit cards and business banking, stood at R78.5bn, 19 percent of gross advances.

The statement from the ministry also touched on banking costs, saying: "There is more to be done to ensure that South Africans have access to fair and cost-effective banking services."

Transaction costs have been on the agenda for many years. In August 2004, a task group appointed by the Treasury and the Reserve Bank released a report on the issue. Public hearings were held in November 2006 and in March and April the following year. And the authorities have continued to apply moral suasion.
Also on the agenda at yesterday's meeting was infrastructure funding. "Constraints to a smoother working relationship between the financial sector and government were identified and the meeting agreed that the minister of finance will co-ordinate attempts within government to remove these blockages."

In a separate statement, Jabulani Sikhakhane, the Treasury's chief director of communications, said the department would like to clarify the response by the minister of finance to a parliamentary question on the negotiations between South Africa and Swaziland over a possible loan of R2.4bn.

"The minister's response has been interpreted by some in the media to mean that South Africa will make the first payment to Swaziland next month (September). This is not true. Negotiations by financial authorities of the two countries are still under way.

"The September 2012 reference in the minister's reply… was in terms of an intended payment schedule, which, as the minister's response makes clear, was subject to the conclusion of negotiations by financial authorities."

Source: iol.co.za
Tags : loans, unsecured loans, loan risks, financial risks, south africa loans
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