A welcome boost for SA consumers

AN oil price of $50 (R575) a barrel may boost South African consumer income by R21 billion this year, helping to offset slower growth in manufacturing, Barclays estimates. Lower oil prices will probably help cut the inflation rate to 3.2 percent in April or May and narrow the current account gap to about 4 percent of gross domestic product, Peter Worthington, an economist at Barclays’ Johannesburg-based investment banking unit, said yesterday. The price of Brent crude has slumped by more than half in the past six months to trade as low as $47 a barrel yesterday. Petrol prices in South Africa have plunged about 20 percent since June, benefiting consumers, who make up about two-thirds of spending in the economy. “Lower oil prices are a big boost to household disposable income in 2015 and this will help to shore up household spending,” Worthington said. Inflation eased to 5.8 percent in November, staying within the Reserve Bank’s 3 percent to 6 percent target band. The current account deficit reached 6 percent in the third quarter. Barclays cut its forecast for economic growth this year to 2.1 percent from 2.4 percent. – Bloomberg