Diesel, petrol prices down 5%
For the first time since February this year, the Malawi Energy Regulatory Authority (Mera) on Tuesday announced an adjustment to fuel prices, reducing the pump prices for diesel and petrol by an average five percent effective on Thursday.
In a statement, the energy sector regulator said the pump price for diesel has been reduced by 5.6 percent from K853.40 ($2.24) to K805.50 ($2.11) per litre while that for petrol has been cut by about 5.1 percent from K839 ($2.20) to K796.20 ($2) per litre. However, the pump price for paraffin has been maintained at K719.30 ($1.89) per litre.
Mera also announced a reduction in the cost of aircraft fuel, JET A1, from K719.39 (about $1.89) to K708.64 (about $1.86) at Kamuzu International Airport in Lilongwe, and K715.21 (about $1.88) to K700.28 (about $1.84) at Chileka Airport in Blantyre.
The reduction in the price of jet fuel has come against the background of complaints by airlines that Malawi had the most expensive jet fuel rates in the region.
Mera has attributed the reduction of the fuel prices to the appreciation of the kwacha.
In May 2012, Malawi adopted an automatic pricing mechanism (APM) for fuel under which pump prices are revised to reflect price movements on the international market.
According to Mera, to minimise the impact of frequent fuel price fluctuations on the international market, the APM was set to operate within a threshold of five percent which is also the trigger limit.
However, since February this year, Mera maintained fuel prices regardless of a continued appreciation of the kwacha against the dollar, attracting fears that the stand would jeopardise inflation fall.
Local business and investment advisory firm, Nico Asset Managers, in its May 2014 economic report, said although inflation rate continued to decline along with falling food prices and the appreciation of the local currency, the maintained fuel and utility prices would put pressure on the general prices of goods and services and would consequently push up inflation.
In July this year, the Monetary Policy Committee (MPC) increased the December 2014 inflation projection blaming it on the inconsistent implementation of the APM.
