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Fuel price rise looms

REMAINED STABLE—Fuel pump prices

John Kapito

An economic expert has warned of a possible rise in non-food inflation in the short to medium terms owing to a looming increase in fuel prices.

The expert, Malawi University of Business and Applied Sciences economist Betchani Tchereni, said consumers should, therefore, brace for tough times ahead.

The Malawi Energy Regulatory Authority (Mera) has been cushioning the pump price and, yet, possible factors to trigger an adjustment have been exceeding the +/- 5 percent threshold.

However, prices have remained stable.

In an interview on Monday, Tchereni said, in the past few months, the price stabilisation fund might have been well stocked, enabling Mera to cushion price movements.

He, however, said the fund is depleted such that it cannot cushion price movements anymore.

“The expectation was that prices were going to go down on the global market and facilitate restocking of the Price Stabilisation Fund (PSF) but it is not the case and prices should be revised upwards.

“When the price rises significantly, for example by 20 percent, that becomes a shocker to all of us. So when you take too long to effect a change in the process, consumers feel the pinch,” Tchereni said.

In a separate interview, Executive Director of the Consumers Association of Malawi John Kapito said, ironically, the cost of living is slowly rising due factors such as inflation and weakening of the Kwacha.

“Cost of living in urban settings has now gone up to K369,000 per month for a family of six and both rural and peri urban areas, the cost of living is now at K211,000 and K169,000, respectively.

“The push has been because of food prices, water, rent, med care, transport and school fees among others and , in this is expected to go up once fuel prices are adjusted and food prices continue rising as we approach the lean period from October,” Kapito said.

But Mera spokesperson Fitina Khonje said the Mera board was yet to deliberate on the changes in landed costs and other economic factors in order to establish impact on pump prices.

“Once trends are examined and a decision arrived at, we shall communicate the outcome. As at September 7 2021, the Price Stabilisation Fund had K1.5 billion,” Khonje said.

She said, at the moment, given fluctuating prices of fuel on the international market, changes in the exchange rate and a struggling PSF, people ought to be modest and better still realistic with expectations.

“We understand the importance of continuity of supply and continued access to fuel. One may not be wrong to expect a movement in the pump price. However, the magnitude can only be determined after thorough scrutiny of all factors,” Khonje said.

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