South Africans can look forward to the New Year with a sense of relief, after the government announced that fuel prices are set to fall to their lowest level in nearly two years.

The Department of Minerals and Energy announced that prices at the petrol pump will fall by around 18% next week, down R1.34 a litre to 6.01, while wholesale diesel prices are set to fall by about 20%.

The department added that the large decline in petrol prices is due not only to a decrease in the international price of petrol diesel and paraffin during the period under review, but also due to a stronger rand against the dollar.

"That is a huge decline. I cannot quantify it right now but it should ease pressure on transport costs and inflation," said Isaac Matshego, economist at Nedbank, in an interview with Reuters.