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Stable fuel prices set to ease overall inflationary pressure

Stable fuel prices set to ease overall inflationary pressure

The two consecutive fuel price decreases recorded in December 2018 and January 2019, coupled by the stable fuel prices for February 2019 will ease overall inflationary pressure and bring relief to businesses and consumers as the economy is still under a depression, Klaus Schade, Research Associate at the Economic Association of Namibia said.

Schade said in particular, the fishing and transport sectors will benefit from more stable fuel prices since fuel accounts for some 29% and 24% respectively of their total input costs, seeing that transport inflation was the main driver of the inflation rate in 2018. Fuel prices for February 2019 are 3.7% (petrol) and 12.0% (diesel) higher than in February 2018.

“After double-digit inflation rates for transport from September 2018 to December 2018 we can expect a return to single-digit transport inflation for January and February 2019, which will ease overall inflationary pressure. Fuel prices (operation of personal transport equipment) contribute 9% to the overall inflation rate and have, therefore, an impact on the overall inflation rate,” Schade said.

He further said new technologies such as e-vehicles, can reduce the dependency on oil and hence on imports and increase the demand for locally available resources, such as renewable energies.

“Namibia needs to start laying the foundation for the necessary shift, even if stable fuel prices might reduce the immediate pressure to embark on the transition,” Schade added.

On 31 January, the Mines and Energy Ministry decided to maintain February’s pump prices for unleaded petrol at N$12.05 per litre while diesel 500 and diesel 50 remain at N$13.08 and N$13.13 per litre, respectively.


 

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Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys

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