Fuel prices to go up?

Post was last updated: December 16, 2016

Alliance Capital Limited expects fuel prices to go up in the next few months. The firm has premised its prediction on a surge in the foreign exchange market which it anticipates will put pressure on prices.

Currently, a litre of petrol is selling at K824.70 while diesel is selling at K815.80 per litre and paraffin K648.70.

The Malawi Energy Regulatory Authority (Mera) last approved an increase in fuel prices in November after considering recent trends in the world of petroleum products.

If proven true, the development will push the cost of living further up as past experience has shown that an increase in fuel prices results in corresponding increase in the price of goods and services.

A consistently high inflation rate in the year, marginally decelerating to 20.1 percent in November, has left many Malawians struggling to make ends meet.

A weak kwacha, which was seen depreciating even in the middle of the tobacco marketing season, is likely to worsen the situation as fuel imports become more expensive for countries with a wobbly exchange rate.

And Alliance Capital expects a further weakening of the kwacha as the country moves deeper into December, with an expectation of increased demand of dollars in the festive season.

Malawi is one of the countries with the highest cost of living in Africa, as reports show Malawi leading other 25 countries in the Common Market for Eastern and Southern Africa with an inflation of 22.8 percent.

Centre for Social Concern (CfSC) reported an increase in the national cost of living to 0.26 percent from K165, 660 in June to K166, 086 in July.

The Centre said low income earners are still facing economic challenges because the gap between the cost of living and what they get at the end of the month is too wide.

Four months ago, the World Bank raised its 2016 forecast for crude oil prices to $43 per barrel from $41 per barrel due to supply outages. The World Bank said in its Commodities Markets Outlook that the upward revision takes into account a recent softening of demand and the recovery of some disrupted supply.

The revision, though not very significant, could spell tough times for oil importing countries such as Malawi which have benefitted from low oil prices in recent months

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