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Fuel increment comes with cascading effect in prices, negatively complimenting on inflationary growth patterns!
By: Kelvin Chisanga
The marginal increment poised on petroleum subsector will automatically result in the sharp changes in key essential commodities, especially touching on the cost scales of production and on the delivery processes of goods, works and services to make pass through unto final destination points, as fuel acts as a basal factor to all the economic systems.
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Zambia with many other African countries went to determine the cost of fuel on a monthly basis which was as a result of sustained supply within the global market following the geopolitical tension between Russia and Ukraine, as usual for a long time now Zambia with specific countries such as Ghana, Kenya, South Africa and Zimbabwe among many others, have embraced a pricing system based on a monthly review of fuel costs, though this triggers an upward adjustment measure which caters across all meaningful economic activities, and the sad reality is that principally during this period of the season the production on both goods and services turn to get slow down.
However, with the Zambian case, we know for sure that fuel and electricity strongly interplay in the market systems, and are quite critical component as factors of key production in the supply value chains, the worse scenario case is the anticipation of erratic supply of electricity if the weather for rain patterns does not change to favour us.
It is well cognizant that fostering an increase in energy sector at this particular time, will certainly do affect key fundamentals such as inflationary effects, as the increase will definitely affect a wider aggregate demand in the economy especially on both consumption and production areas, following the projection of seeing a steady growth path in which the country has been building on, but such changes especially during the current course of budgetary function and implementation in this particular material year of 2023, as it will required to take 2024 on safe landing.
