Malawians woke up yesterday to the news of a 10.5 percent hike in the fuel pump price, a development expected to strain consumers and companies’ budgets two months after another raise in November 2013.
Malawi Energy Regulatory Authority (Mera) board chairperson Lyton Zinyemba justified the hike in a statement, saying it is because of the depreciation of the kwacha against the dollar, the world’s reserve currency.
The local unit depreciated by about 10 percent in January, and because of Mera’s adoption of automatic pricing mechanism (APM), the regulator had no choice but to raise the price.
Following the raise, petrol is now selling at K839 per litre from K760 per litre, a 10.3 percent rise, while diesel, used mostly in big vehicles and industries has jumped 10.8 percent to K853.40 per litre from K770 per litre.
Chancellor College economics professor Ben Kaluwa told Business News yesterday the raise is not surprising in view of the recent behaviour of the kwacha.
“The kwacha has been depreciating, and since fuel pricing is dependent on kwacha movement, the price had to go up,” he said.
The raise will trigger the rise in inflation— increase in the general price level of goods and services —currently at 23.5 percent as of December 2013, according to the National Statistical Office (NSO).
This means consumers will have to brace for price hikes in goods and services such as bus fares.
Last year, the Consumers Association of Malawi (Cama) warned that the price of fuel will continue to rise in the foreseeable future due to the economic and social failures the country is going through.
In its end of the year statement, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) hailed the introduction of APM, saying it has helped to reduce fuel import bill by 23 percent to $23 million from $30 million.