National Bank of Malawi (NBM) plc says the effects of the recent fuel price increases are expected to be felt in the second quarter (Q2) of this year.
In its April 2021 Economic Newsletter, the Malawi Stock Exchange (MSE)-listed bank, however, said inflationary pressure is expected to ease in Q2 largely due to the benefits of relatively low food prices in prospect of a good harvest this year.
Reads the newsletter in part: “The Malawi kwacha depreciated by 4.6 percent against the dollar in the second half of 2020.
“As a result, two fuel prices increases have been affected by the Malawi Energy Regulatory Authority [Mera] averaging 28 percent on December 16 2020 and 11 percent on March 9 2021.”
Since 2012, Mera has been using the automatic pricing mechanism whereby fuel pump prices are adjusted to reflect fuel price movements on the international market and changes in value of in-bond landed cost of petroleum products and movements of the kwacha against the dollar.
In an interview on Thursday, Consumers Association of Malawi executive director John Kapito said the kwacha continues to be under pressure at a time there is an upward demand of petroleum products which could trigger price increases on petroleum products.
“With Covid-19 easing down, the markets are beginning to start their operations which will have huge increases on petroleum products as business comes to normality and this will have a huge impact on consumer’s welfare,” he said.
On his part, Betchani Tchereni, associate professor of economics at The Polytechnic, a constituent college of the University of Malawi, said with the tobacco market opening on Tuesday, inflation pressure is expected to ease.
“However, we are likely to face some troubles after Q2 going into Q3, especially that the import demand will be rising,” he said.
Effective March 9 2021, petrol is selling at K899.20 per litre, diesel, mostly used by industry and utility service vehicles is atK898 per litre from K826.40 and paraffin, mostly used by rural people is now selling at K719.60 per litre.