Justified by crude price bulls and Kwacha currency bears, the energy regulator in Africa’s red metal hostspot on 26 December resolved to hike pump prices of fuel by an average of 10% effective midnight, this was confirmed by the Energy Regulation Board (ERB) Chairman Raymond Mpundu.
Petrol will now sell for K17.62 from K15.98 per liter as diesel climbs 9.55% to K15.59 a liter while kerosene pricing ebbed higher 18% to K15.39 a liter.
Read also: Crude ‘bulls’ and Kwacha ‘bears’ could trigger a fuel hike
Crude markets continue on a bullish streak supported by OPEC+ member states commitment to curb supply by an additional 500,000 barrels a day above the 1.7million barrels after March 2020. International ice Brent futures are trading for $66.5/bbl. while WTI US crude futures are trading for $61.45/bbl. This coupled with the Kwacha depreciation in the despite pressure easing has exceed the 2.5% cost trigger for the ERB computation to justify a price hike.
Inflationary pressure alert. Zambia’s inflationary environment remains elevated with double digit readings of 11.7% for December announced by the Zambia Statistics Agency (ZSA). Energy risks remain key drivers of inflation from the electricity to fuel pricing. The Bank of Zambia in its MPC communique did forecast widened inflation for the next 8 quarters.
“Rising inflation is an early warning indicator for interest rate risk,” Economics Association of Zambia National Secretary Mutisunge Zulu said during business review segment on National Television on 25 December.
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