Malawi Energy Regulatory Authority (Mera) has again adjusted fuel prices with one litre of petrol at K570.20 from K539 since the last hike in September, representing a 5.79 percent, a move likely to have reciprocal adjustments in transport costs and other items.
The increase, effective from Thursday October 4, has been attributed to Automatic Pricing Mechanism (APM).
MERA said in a statement that diesel has jumped from K434.30 a litre to K469.90, an 8.20 percent increase.
Petrol will be selling at at K570.20 from K539.
Paraffin, a commodity mostly used by the impoverished people from the rural areas remains at K171 per litre.
The regulator that it had considered recent trends in the world petroleum products prices and other macroeconomic fundamentals to raise the prices
“Since the last pump price revision of 7th September 2012, average FOB prices on the international market increased by 1.05% and 2.50% on diesel and paraffin respectively. During the same period average FOB prices for petrol slightly declined by 0.56%,” Mera said
MERA said the exchange rate of Malawi Kwacha to the United States Dollar has depreciated by 6.73% over the same period of time from K288.99 to the USD Dollar noted on 7th September 2012 to K308.45 to 1US Dollar on 2nd October 2012.
“A combined effect of the FOB prices and the exchange rate of Malawi Kwacha to the US Dollar has resulted in increased landed cost for petrol, diesel and paraffin by 5.66%, 7%, and 8.12% respectively,” the regulator said in a statement signed by MERA chairperson Lyton Zinyemba.
MERA urged all filling stations “ to display pump prices being charged on clearly visible signage within their premises.”
Economic experts have said the fuel price increase would affect the transport sector as it will see increase in the cost of transporting people, retail goods and manufacture of products.
The economists have since warned that the increase of fuel prices will “attract an increase in inflation” and that it would affect all sectors of the economy.
“The high rising inflation rate will continue to erode the purchasing power of money, resulting in lower disposable incomes and reduced savings,” says Nico Asset Managers in its latest economic.
Consumer Association of Malawi (CAMA) boss John Kapito has said consumers should brace themselves for a chain of price increases.
“The trend of rising fuel prices is most likely to have a ripple effect on the local economy as prices of other commodities have a tendency to follow suit,” he said.
Coupled with high electricity tariffs, an increase in food prices and a weakening Kwacha has sent shockwaves throughout the country giving birth to uncontrollable industrial strikes in major cities while income levels for average employees remain stunted.
Food inflation is also on the rise because of a drought in many parts of Malawi leading to escalating prices of maize now at K3500 a bag of 50 kilograms.Follow and Subscribe Nyasa TV :